China stocks may be coming back into favor. Chinese game developer Shanda Games (GAME) is making some big moves in the mobile gaming space which may have turned profits around.
The company’s revenue of $175.6 million was down just 4% from the year-ago quarter, that’s a lot better than the 20% drops it has reported on the two previous earnings reports. (Source: This Beaten-Down Company Is Getting Better)
Shanda has been focusing on mobile gaming. Earlier this year, Shanda had the 5th grossing game on Google Play called Million Arthur. Million Arthur became the second top-grossing app on Apple’s app store in China. Shanda went from having zero in mobile game revenue last year, to $17 million as of the last earnings report. Shanda believes that 50% of all its revenue will come from mobile gaming over the next couple of years. Shanda has 36 mobile games scheduled for release in the coming months.
But the real beauty is the stock chart of Shanda Games (GAME).
GAME is at a major support level that it has bounced off of 4 times over the last 4 months. The stochastic is oversold. The stock is coiled up into the apex of the Descending Triangle pattern and it’s going to break either up or down. You want to set a tight stop loss just below that major support level drawn with a horizontal line on the chart above. The goal is a 5% to 10% pop then get out. We don’t marry stocks.
Disclosure: I do not hold any stock in Shanda Games (GAME) nor have I received any compensation to write this article.
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