I will never dismiss the results found in an earnings cycle, especially for the first one of the fiscal year. However, some reports are more meaningful than others. I believe this perfectly describes Glu Mobile Inc. (NASDAQ:GLUU). On the eve of their first-quarter earnings report, analysts wonder if GLUU stock can gain traction through its mobile games and if management can clean up its financials.

While the markets will scrutinize the numbers, in the bigger picture, they won’t matter as much. For instance, we already know what the strategy is for Glu Mobile stock. The underlining company needs to generate excitement with its gaming portfolio. To do that, it needs to make heavy investments in research and development costs, along with other operating expenses.

On paper, the situation is a mixed bag. The balance sheet is relatively clean, with the obvious highlight being that GLUU has no debt. On the other hand, the mobile-game maker hasn’t earned a profit since fiscal 2014. Granted, plenty of organizations don’t make money in their initial phase. Amazon.com, Inc. (NASDAQ:AMZN) comes immediately to mind. But this is GLUU stock we’re talking about.

Furthermore, one worries about substantial competition from stalwarts Activision Blizzard, Inc. (NASDAQ:ATVI) and Electronic Arts Inc. (NASDAQ:EA). Both names have aggressively ramped-up their mobile gaming coverage, and let’s be honest: either one of them can easily take out Glu Mobile stock if they so choose.

With all that said, most investors aren’t likely using the fundamentals to justify their gamble. Instead, they’re looking at the bigger picture. As I mentioned earlier this year, mobile games generated almost $41 billion worldwide in 2017.

The industry outlook is very strong, which makes small players like GLUU risky, but compelling.

A Solid Q1 Might Help, but It’s Not the Whole Story

For its upcoming Q1 fiscal 2018 report, consensus estimates peg earnings per share at two cents. The estimate spectrum is extremely tight: the worst expectation is a one-cent EPS target, while the median forecast is two cents. Thus, everybody anticipates GLUU to generate positive earnings, which would be a first for a long time.

On the revenue front, we see similar expectations for success. Consensus calls for $77.7 million in top-line sales. Estimates range from $77.4 million to $78 million. Should revenues come in as expected, the company will enjoy a 12.6% from the year-ago quarter. Over the last four years, annual sales growth averaged 11.8%.

Sequentially in the last three quarters, we’ve seen operating expenses decrease. So long as the company managed to keep its cost of goods sold under control, they should hit their target. But does that necessarily mean everything’s clear blue skies for GLUU stock?

A solid earnings report never hurt anybody (unless it does). Glu Mobile stock will probably benefit in market value, but that’s not entirely predictable.

Looking at its earnings history going back four years ago, GLUU stock beat EPS targets 13 times out of 16. If it was true that positive results boosted shares, we’d expect the price to rise significantly higher. But since its Q1 2014 earnings release, GLUU gained less than 10%.

On the flip side, misses are never helpful in the nearer-term. Of the three times Glu Mobile stock fell short, shares slipped an average of 4% the day after earnings.

Therefore, the only reasonable certainty we have is this: if GLUU misses, shares will take a hit. But historically speaking, it has always recovered from those shortfalls.

GLUU stock is an Intriguing Play for the Risk-taker

I’m not going to claim that GLUU stock is a sure thing. As I stated earlier, I’m not a big fan of the competitive pressures, and it has giants in the sector.

In addition, the company is taking a big risk by often spending more than it makes. The negative free cash flow could impede its progress, perhaps making it necessary to get into debt just to keep up with everyone else in the industry.

But gaming is a tricky animal. As Epic Games’ addictive hit Fortnite proved, the simplest changes can lead to mind-blowing success. And that’s the allure of Glu Mobile stock. It has several titles under its belt, but they’ve produced mixed results. At any moment, though, it could have a massive hit on its hands.

Is GLUU fraught with risk? Absolutely, it is. But with the right product, and a little help, the company can surprise Wall Street. If you can stomach it, Glu Mobile might be worth a shot with gambling money.

As of this writing, Josh Enomoto did not hold a position in any of the aforementioned securities.