One of the most remarkable stock runs that we've seen in the gaming sector over the past month is from Glu Mobile (GLUU).
Only a month ago, this stock was trading at $3.78, and it's now at $7, for an 84% jump.
All it took for the stock to move was the release of a new hit game: Kim Kardashian: Hollywood. The game quickly went to the top of the charts with lots of in-app purchase opportunities that users were quick to gobble up.
This is the second strong hit game that Glu has had this year, the first being the release of Deer Hunter 2014.
Glu is a relatively small company, with a current market cap of only $600 million. Having one or two popular hit games in a short span can have a strong financial impact on company of this size, but it also shows the power of a hit game for any of the gaming companies.
Investors are still waiting for some hit games from Zynga (ZNGA) and its new CEO Don Mattrick. It's been over a year since he was announced as company founder Mark Pincus's successor.
He came in with a strong pedigree and promises of change. Headcount was reduced. Upper management was shuffled, and he brought in his key people. Since those initial moves, however, nothing has been gained.
Most of the new games that have come out under Mattrick's watch were in the pipeline before he arrived. None of them has really broken out.
Any new games started under Mattrick have yet to materialize.
In the meantime, after getting a bump earlier in the year on hopes of new revenue to come from new games, the stock has slumped lately back to the $3 level.
Mattrick has made one big M&A play so far, going after England's NaturalMotion, but so far that technology has yet to be integrated into any new games leading to some success.
The one thing which Mattrick has going for him is just how profitable a hit game can be -- and this notion, of course, extends to Zynga's investors as well -- but finding that game is like trapping lightning in a bottle. As gaming has moved to mobile and competition has grown fiercer, it's seemingly become more and more difficult to break through the clutter and get noticed.
For investors long the stock, the good thing going for you is that this is a name that has been forgotten with little extra value built into it beyond the cash. The bad thing is that this is a name in which it's hard to predict when the next hit game is going to come.