When I started out as a financial blogger, I was very bullish on mobile gaming companies. Given the expected growth in the mobile gaming sector, I used to believe that the likes of Zynga (ZNGA) and Glu Mobile (GLUU) are poised to be long-term winners.

According to research from intelligence firm Digi-Capital, mobile gaming industry was estimated to reach $88 billion in value in 2015. The firm is also forecasting that the sector will continue growing at a CAGR of 8% from 2016 and will surpass the $110 billion mark by 2018.

(Source: Digi-Capital)

However, I later realized my mistake and inferred that it is impossible for any particular mobile gaming stock to continue dominating the market in the long-run.

My bullish calls on Zynga yielded negative returns. However, as for Glu Mobile, I was able to right my mistake and reversed my stance at the correct time. Consequently, as you can see from the image below, my calls on Glu Mobile have returned over 20% annual profits.

(Source: TipRanks.com)

Glu Mobile’s has been pretty volatile over the years. However, the stock has been moving downwards ever since the company announced a significant guidance cut for Q4. During the Q3 conference call, Glu Mobile’s management announced that it expects Q4 revenues to be in the range of $50 million-$52 million, significantly below expectations for $94.2 million, and EPS of -$0.02 to -$0.03, lower than consensus of a $0.06 per share.

For the full year, Glu Mobile is forecasting revenues of $234.3 million-$236.3 million (way below consensus of $273.4 million) and EPS of $0.06-$0.07.

Still not a long-term stock

Going forward, I still think Glu Mobile is not a stock that long-term investors should consider buying. The mobile gaming industry is a cyclical business and is it impossible for any single company to dominate the sector for a long period of time. Due to the small size of smartphones, developing a viral game is difficult. And even if a company manages to develop a viral game, it stays popular for a limited amount of time. While the company enjoys strong profits in that time, it begins struggling ones the popularity of those games starts waning. And it is impossible for any company to regularly come up with viral games.