As they say, a win is a win. The Dow Jones Industrial Average might have only risen by less than three points yesterday, but it still recorded a new record high as a result. Eight days and counting, but investors likely paused their buying spree to take stock of exactly what’s going on in the economy and the world. Lots of mixed signals as to which way we’re heading.
The following three stocks, however, held a party of their own, but you should resist the urge to high-five everyone in the cubicles next to you. Smart investors won’t celebrate until they know why their stock surged, because without a fundamental basis for the bounce, these stocks could just as quickly make the return trip down.
|OCZ Technology (NASDAQ:OCZ)||20.7%|
|Glu Mobile Inc. (NASDAQ:GLUU)||16.9%|
|Heckmann Corporation (NYSE:HEK)||11.6%|
Thrown a lifeline
Troubled solid-state drive maker OCZ Technology got a bit of a confidence boost late Monday evening that carried over into Tuesday’s trading, when it secured a $30 million loan and security agreement with Hercules Technology Growth Capital consisting of a $15 million term loan and a $15 million revolving loan facility.
OCZ’s CEO said the loan is but the first step of putting the drive maker on a more secure financial footing. “This capital will be used to strengthen the business, fund future growth, and support emerging enterprise opportunities,” he said. Its previous loan facility it had with Wells Fargo & Co (NYSE:WFC), which had no outstanding balance on it, was cancelled when it closed the current one with Hercules.
The first $10 million of the term loan was taken when it closed the agreement, and it will have to start paying it back beginning in November in 30 monthly installments. OCZ will get the remaining $5 million of the term loan when it gets current in its SEC filings and achieves certain revenue levels for two consecutive quarters. That could be the challenging part for the drive maker, which was thrown into turmoil after problems surrounding certain customer incentive programs arose that led to significant quarterly losses and the abrupt resignation of its CEO. Last month it gained an extension for getting into compliance with Nasdaq listing requirements and has until April 8 to get its SEC filings submitted.
Rolling the dice
If it’s good enough for Zynga Inc (NASDAQ:ZNGA) then it’s good enough for Glu Mobile Inc. (NASDAQ:GLUU). Or vice versa. Glu launched its first real-money gambling product in conjunction with the U.K.’s Probability, a mobile entertainment gambling provider.
Zynga recently secured a gambling license in Nevada, and with states like New Jersey following suit in allowing online gambling for state residents, it’s seen as a potentially lucrative niche to go after. Glu Mobile Inc. (NASDAQ:GLUU), though, may have been the first mover here, having entered into a strategic relationship with Probability last year for real-money gambling games. The launch of the game that features intellectual property from its Samurai vs. Zombies Defense game puts Glu Mobile Inc. (NASDAQ:GLUU) in the forefront here.
Yet despite the obvious potential of making money through gambling, I still view it as a desperation move by game makers who undoubtedly realize social gaming has reached its limits and now they must find something — anything! — to bring money in. Going all-in on gambling suggests they have little else to offer.