Playstudios to Purchase $24.6M Worth of Shares Held by Microsoft

Posted on: June 11, 2024, 05:22h. 

Last updated on: June 12, 2024, 10:11h.

Todd Shriber @etfgodfather Read More
Expertise: Financial, Gaming Business, Mergers and Acquisitions.

Shares of social casino developer Playstudios (NASDAQ: MYPS) rallied in Tuesday’s after-hours trading session after the company announced that it’s purchasing $24.6 million of its equity held by Microsoft (NASDAQ: MSFT).

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A scene from a Playstudios game. The company is buying $24.6 million worth of its shares from Microsoft. (Image: OfftheStrip.com)

While not a share repurchase program in the traditional sense, the move to purchase the shares owned by Microsoft has the positive impact of reducing Playstudios’ shares outstanding count. The company said that tally will decline by 8.6% by way of the Microsoft transaction.

Shares were purchased at a price of $2.11 per share and funded with available cash. Total consideration paid by PLAYSTUDIOS was $24.6 million. The repurchase reduces the number of shares of the Company’s outstanding common stock by approximately 8.6%,” according to a statement issued by Las Vegas-based Playstudios.

Shares of Playstudios are off 48.9% over the past 12 months and 15.5% on a year-to-date basis.

Playstudios Quietly Buys Back a Lot of Stock

Playstudios became a freestanding public company in June 2021 after a merger with Acies Acquisition, a blank-check firm started by former MGM Resorts International (NYSE: MGM) CEO Jim Murren.

Over those three years, the stock has struggled mightily, but management has signaled it sees value in the shares. In addition to the transaction with Microsoft, Playstudios is in the midst of a $50 million share buyback program.

“Since becoming a public company, PLAYSTUDIOS has demonstrated a commitment to enhancing shareholder value and maximizing our returns on capital. Purchasing the shares held by Microsoft is a further example of this as we were able to efficiently repurchase 8.6% of our outstanding common stock at a discount to current market prices,” said CEO Andrew Pascal in the statement.

Playstudios, which makes games such as myVegas Slots and myVegas Blackjack, has its own loyalty program, playAwards. Players can redeem those points for amenities and lodging at MGM venues, including glitzy venues such as Aria, Bellagio, and Mandalay Bay on the Las Vegas Strip, as well as some of the operator’s regional casinos.

Other Factors Supporting Playstudios

While Playstudios stock is mired in a lengthy slump and Wall Street pays little attention to the name, there are some bullish factors that could bolster the investment thesis.

The company operates in a fast-growing segment, is profitable, and carries no debt. As noted by analyst Sandeep David, has cash on hand of $133 million, or about 40% of its current market capitalization. That implies the stock is getting essentially no credit for that stockpile.

David noted that cash position could increase quarterly, potentially paving the way for Playstudios to deliver a special dividend, though the company hasn’t confirmed such a move will occur.