Shares of Gluu Mobile (GLUU) shot up in early morning trading Thursday before settling with a modest gain. The company released an 8K that shows a new deal with MGM. The announcement includes warrants from MGM to purchase up to 3.33 million shares of Gluu Mobile shares. This news could have a huge impact on shares in the near and long term.
Details of the warrants include:
· Rights to make games based on Robocop and James Bond
· Rights to purchase up to 3,333,333 common shares at $3 each
· Expiration on warrants on July 15, 2018
· First 333,333 vested and become exercisable on July 15
· 333,333 shares vest and become exercisable at release of a new mobile game based on MGM intellectual property (does not include first Robocop game)
· 1,000,000 shares vested and exercisable with release of new James Bond game and also 1,000,000 shares per sequel until limit reached
Robocop is a beloved franchise. Gluu Mobile has been working on a mobile game centered around the movie. More exciting news came for Gluu Mobile as the reboot of "Robocop" takes over the San Diego Comic Con. Pictures and videos of new weapons and armor have gone viral and are building buzz for the movie, expected to release February 7th, 2014. A game from Gluu Mobile should see strong downloads and in-game purchases as buzz continues around the franchise. A successful reboot of the franchise could lead to movie sequels and game sequels as well.
The other gaming franchise headed Gluu Mobile's way is James Bond. The popular English spy has been used in video games before with much success and mobile games should be no different. Popularity of James Bond is at a near all-time high with the success of "Skyfall". The 2012 movie grossed $304 million in North America and went on to gross over $1 billion in worldwide box office. A follow-up movie from director Sam Mendes is in the works and will be released in 2014 or 2015.
I like this deal from MGM and Gluu Mobile. MGM gets the option to buy shares of Gluu Mobile at $3, which could turn into a bargain in a year or two, when investors recognize the cheapness of the stock.
For Gluu Mobile, it represents a new base of games with a built in audience. Unlike earlier Gluu games that had to be built up, these two franchises should top the charts immediately. With shares already trading below $3, Gluu isn't giving up too much either to MGM.
Another important event was Gluu Mobile's release of "Black Gate: Inferno". The game represented the first title from Gluu's mobile publishing arm. The game is from EGLS, a Chinese partner of Gluu Mobile. The online 3D MMORPG offers an early look at the potential of the company's publishing unit.
On Thursday, Gluu Mobile also announced the release of "Zombies Ate My Friends". The new mobile game is available for iPhone, iPad, iPod Touch, and Mac computer. The game is free to play and will center around a comical take on the zombie apocalypse.
I highlighted shares of Gluu Mobile back in March of 2012 as an acquisition target. With no debt on the books and a strong portfolio of games, I think this remains true. With Gluu's partnerships and entry in real money gaming, the company also makes a logical acquisition target by a larger rival.
In 2013, shares of Gluu Mobile are up over 13%. There is still plenty of room to run for this leading freemium gaming company. The company has real money gaming, international expansion, licensing from MGM, and other growth initiatives to push shares higher. In the past fifty two weeks, shares of Gluu Mobile are down over 50%. MGM is willing to pay $3 for Gluu Mobile shares and you should be too. Stay tuned to this game maker for future growth.