Playstudios Buys $24.6M of its Own Equity in Strategic Move to Curb Shares Decline

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In an intriguing financial move that shook Tuesday’s after-hours trading session, Playstudios, a social casino developer listed on the NASDAQ as MYPS, disclosed its initiative of purchasing $24.6 million worth of its own equity, presently held by tech giant Microsoft (NASDAQ: MSFT).

This maneuver, while not adhering to the typical techniques of a traditional share repurchase program, is observed by financial experts as a strategic approach to lessen the count of Playstudios’ shares, curtailing the number by a significant 8.6%. According to a public announcement relayed from the heart of Las Vegas, where Playstudios resides, they acquired the shares at a rate of $2.11 per share, utilizing accessible liquidity and consequently dished out a total of $24.6 million, which led to a 8.6% shrink in the company’s outstanding common stock.

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A glance at the past weaves a tale that hasn’t been particularly rosy. Previous 12 months have seen Playstudios’ shares nosedive by a whopping 48.88%. Year-to-date figures paint a similarly grim picture with a drop of 15.50%.

Playstudios, once a subsidiary, emerged as an independent public firm on the financial stage in June 2021, following a merger with Acies Acquisition. Acies is a special purpose acquisition company (SPAC) founded by the former CEO of MGM Resorts International (NYSE:MGM), Jim Murren.

Despite tasting bitter times on the stock market, the Playstudios management has hinted at the potential they see in retaining their shares, a perception reflected in the recent transaction with Microsoft. In the throes of a $50 million share buyback scheme, Andrew Pascal, CEO of Playstudios, confirmed their vision in a statement. He noted the firm’s dedication to augmenting shareholder value and optimizing capital returns. He emphasized that the purchase of Microsoft-held shares, leading to a repurchase of 8.6% of the outstanding common stock at market discounted rates, is a sturdy example of this commitment.

Popular for their games like myVegas Slots and myVegas Blackjack, Playstudios also hosts the loyalty program, playAwards. Players have the option to barter these points for amenities and accommodations at MGM venues, featuring such illustrious establishments as Aria, Bellagio, and Mandalay Bay on the Las Vegas Strip, in addition to select regional casinos under the operator’s umbrella.

Despite being embroiled in a sustained slump, with Wall Street showing seemingly little interest in the firm, several bullish elements could potentially support Playstudios’ investment ethos. Boasting of no debt and operating in an expanding segment, Playstudios sits on a cash pile of $133 million, equivalent to nearly 40% of its present market capitalization, pointed out analyst Sandeep David. This implies that Playstudios’ stock essentially doesn’t hold any credit for this substantial financial reserve.

David added the possibility of this cash position elevating quarterly, which might pave the way for Playstudios to introduce a special dividend, despite the corporation staying tight-lipped about such a development. This certainly puts Playstudios in an intriguing position in the near term for the savvy investor looking to play the odds.