PlayStudios to Acquire $24.6 Million Worth of Shares Owned by Microsoft
Playstudios stock gained momentum during Tuesday's after-hours session as the social casino developer announced purchasing $24.6 million worth of its shares from Microsoft. This transaction will decrease the company's total outstanding shares by 8.6% - ceasing at 8.6% fewer shares.
The deal, not resembling a share repurchase program traditionally, affected positively by reducing shares of Playstudios. The equity swap occurred at $2.11 per share and entirely funded by available cash, with the repurchase totaling $24.6 million. "The repurchase reduces the number of shares of the Company’s outstanding common stock by approximately 8.6%," stated Playstudios.
Shares of Playstudios have plunged by 48.88% over the past 12 months and 15.50% in year-to-date figures.
Playstudios Enters Stock Buyback Scheme
After three years as an independent public firm after merging with Acies Acquisition, a blank-check company created by former MGM Resorts International CEO Jim Murren, Playstudios has fought a losing battle with its stock. The management, however, persistently sees worth in the shares. Besides the deal with Microsoft, Playstudios also focuses on a $50 million share buyback process.
"Since becoming a public company, PLAYSTUDIOS has exhibited a proclivity for enhancing shareholder value and maximizing our capital returns. Purchasing the shares held by Microsoft symbolizes this as we successfully bought back 8.6% of our outstanding common stock at discounted market prices," said Playstudios' CEO, Andrew Pascal, as conveyed in the announcement.
The Las Vegas-based company produces games like myVegas Slots and myVegas Blackjack. It controls a loyalty program - playAwards. Gamers can redeem rewards for amenities and housing at MGM venues, including popular spots like Aria, Bellagio, Mandalay Bay on the Las Vegas Strip and some of the operator's regional casinos.
Encouraging Factors for Playstudios
Playstudios remains neglected on Wall Street, yet its stock betrays no signs of reviving. However, there are positive aspects that may strengthen Playstudios' investment case.
The firm operates in a burgeoning space, is profitable, and is debt-free. In addition, analyst Sandeep David pointed out the company has $133 million in available cash - approximately 40% of its current market value. This cash amount isn't compensated in the stock valuation. Notably, David also suggested that the company's cash balance could improve each quarter, making a special dividend a possibility. While confirmation isn't available, Pascal didn't dismiss this scenario.
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