Glu Mobile Inc. (GLUU) shares fell more than 7% during Wednesday's session after Stephens downgraded the stock to Underweight and lowered its price target to $4.00 per share. Analyst Jeff Cohen cited the lackluster launch of "Disney Sorcerer's Arena," the impact of the delay in Major League Baseball on "Tap Sports Baseball," and ongoing skepticism around "Deer Hunter" as the company's next big launch as bearish developments over the past few weeks. The analyst's $4.00 price target implies 35% downside from the stock's opening price on Wednesday.

During the fourth quarter, Glu Mobile beat revenue and earnings expectations with record profitability. Analysts had been very bullish on the stock prior to the COVID-19 outbreak, citing a stable of core growing games, strong pipelines, and expanding margins, among other things. While Stephens has turned bearish, other analysts believe that social distancing requirements could continue to benefit gaming stocks.

Chart showing the share price performance of Glu Mobile Inc. (GLUU)

From a technical standpoint, Glu Mobile stock broke down from the 200-day moving average at $5.98 during Wednesday's session after trending sideways for much of late March. The relative strength index (RSI) remains neutral with a reading of 43.45, but the moving average convergence divergence (MACD) could see a near-term bearish crossover. These indicators suggest a bearish bias over the near term.

Traders should watch for consolidation between Fibonacci support levels of $5.61 and upper trendline resistance around $6.00. If the stock breaks down, traders could see a move toward the next Fibonacci support level at $4.99 or a retest of prior lows near $4.00. If the stock breaks out, traders could see a move toward Fibonacci and trendline resistance near $6.50 per share over the coming sessions.

The author holds no position in the stock(s) mentioned except through passively managed index funds.