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On Friday, PlayStudios (NASDAQ:MYPS) received an upgrade in stock rating from Hold to Buy by analysts at Craig-Hallum, accompanied by a price target increase to $3.00 from $2.00. The firm’s analysts cited the company’s recent covert testing of its Sweepstakes casino, The Win Zone, with select players, as a basis for their optimism about the future of the site. According to InvestingPro data, the company currently has a market capitalization of $176 million and generates annual revenue of $274 million.
Craig-Hallum highlighted that despite PlayStudios’ entrance into the competitive high-growth sector of sweepstakes casinos, the company’s shares are trading at an all-time-low valuation of just over 1x EBITDA. InvestingPro analysis confirms this attractive valuation, showing an EV/EBITDA ratio of just 2.17x and a substantial free cash flow yield of 23%. The stock appears undervalued based on InvestingPro’s Fair Value analysis, with 8 additional ProTips available to subscribers. Analysts believe the market is underestimating PlayStudios’ ability to compete with industry giants like VGW (Chumba), Pulsz, and Stake.
The research firm pointed out that PlayStudios’ proprietary playAWARDS program offers a valuable differentiation tool, especially in VIP programs and loyalty incentives. With over 10 million monthly active users (MAUs) and an established rewards system, PlayStudios’ The Win Zone is expected to stand out against competitors.
The analysts also mentioned a recent positive ruling from the Apple (NASDAQ:AAPL) v. Epic Games case as a beneficial factor for PlayStudios. Additionally, they noted the company’s strong balance sheet, which is believed to be capable of supporting further investments for growth.
In conclusion, Craig-Hallum’s upgrade and price target raise reflect their confidence in PlayStudios’ strategic position and potential for growth within the sweepstakes casino market.
In other recent news, PlayStudios reported its first-quarter 2025 earnings, revealing a revenue of $63 million, which fell short of the expected $66.83 million and marked a 19% decline year-over-year. The company also posted a negative earnings per share (EPS) of -$0.02, missing the forecast by $0.03. Despite these challenges, PlayStudios’ Adjusted EBITDA stood at $12 million, although it experienced an 18.5% decline compared to the previous year. In light of these results, Benchmark analysts upgraded PlayStudios’ stock from Hold to Speculative Buy, citing the company’s operational discipline and strategic initiatives as key factors in their decision.
Benchmark analysts highlighted the company’s direct-to-consumer momentum and the execution of its Reinvention plan, which have helped mitigate the impact of weaker engagement within its core offerings. PlayStudios has also announced plans to launch a new Tetris title and a sweepstakes platform later in 2025, which are expected to contribute to revenue growth. The company is cautiously rolling out its sweepstakes initiative to ensure compliance with regulatory requirements. Additionally, PlayStudios continues to project net revenue between $250 million and $270 million for the full year 2025, with consolidated adjusted EBITDA estimated between $45 million and $55 million.
The company’s management has reaffirmed its financial guidance for 2025, excluding potential revenue from the upcoming product launches. PlayStudios’ robust net cash position and strategic approach to compliance have contributed to the positive outlook from Benchmark. The analysts’ decision to upgrade the stock reflects their confidence in the company’s potential for margin leverage and new product launches.
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