Gold prices steady, holding sharp gains in wake of soft U.S. jobs data
On Friday, BTIG maintained a Neutral rating on Playtika Holding Corp. (NASDAQ:PLTK) stock following the company's announcement of a significant acquisition. Playtika revealed it has agreed to purchase SuperPlay, a mobile gaming firm located in Tel Aviv, for an upfront cash payment of $750 million, which includes a $50 million retention bonus, and additional earnout potential that could bring the total price to $2 billion.
SuperPlay's current portfolio includes two live games, Dice Dreams and Domino Dreams, which are estimated to have generated between $87 and $88 million in revenue in the second quarter of 2024. The company also has two more titles in development, with one expected to begin a soft launch early in 2025. SuperPlay's revenue for the last twelve months as of the second quarter of 2024 was reported at $265.8 million, marking a 158.1% year-over-year increase. Playtika's management has expressed optimism about the growth potential for Domino Dreams, which currently represents 15% of SuperPlay's revenue.
The acquisition is anticipated to be finalized in the fourth quarter of 2024. Analysts predict that the total compensation for the deal will surpass $1 billion, exceeding the initial cash consideration and retention payments. In their report, BTIG provided a rough estimate of the effective purchase multiple against 2027 estimates, arriving at a range of 5 to 12 times, with 7.0 times being the baseline scenario. The calculations assume steady performance for Dice Dreams, proportional growth for Domino Dreams, and significant contributions from a third title starting next year.
In the bear scenario, SuperPlay is expected to meet its margin targets for 2025-2027, while the bull scenario assumes margins aligning with Playtika's current average. The analysis indicates that Playtika's goal for a mid-single-digit effective purchase multiple is achievable, especially if the company can enhance monetization rates, launch titles directly to consumers, and if the fourth title in development meets or exceeds the performance of Domino Dreams. Execution will be crucial moving forward, but the acquisition appears to offer an attractive opportunity for Playtika to expand its casual gaming division and diversify beyond social casino games.
In other recent news, Playtika Holding Corp is set to acquire the mobile gaming company, SuperPlay, in a deal valued at $700 million upfront with an additional contingent consideration of up to $1.25 billion based on SuperPlay's future financial performance. This acquisition, expected to close in the fourth quarter, is seen as a strategic move for Playtika, expanding its portfolio with popular titles like Dice Dreams and bolstering its market presence in the mobile gaming industry. The terms of the deal were endorsed by TD Cowen, which maintained its Buy rating for Playtika.
Playtika's Q2 2024 earnings showed a slight decrease in revenue, reaching $627 million, marking a 3.7% decrease sequentially and a 2.5% drop year-over-year. Despite this, the company displayed growth in its direct-to-consumer business, particularly with its Bingo Blitz title, and is set to launch a new game, Claire's Chronicles, in Q2 2025.
The company's recent acquisitions, including Animals & Coins and Governor of Poker 3, are performing well, and Playtika is actively seeking further acquisitions. Playtika also entered a licensing agreement with IGT to incorporate real-world content into its slot-themed games. These are some of the recent developments in the company.
InvestingPro Insights
As Playtika Holding Corp. (NASDAQ:PLTK) embarks on an ambitious acquisition of SuperPlay, it is important for investors to consider the company's financial health and market performance. With a market capitalization of $3.05 billion, Playtika showcases a solid financial base. The company's P/E ratio stands at 14.16, reflecting investor confidence in its earnings potential, and this is further supported by a more favorable adjusted P/E ratio of 11.95 for the last twelve months as of Q2 2024. This adjustment indicates an improved earnings outlook as compared to the standard P/E ratio.
Moreover, Playtika's gross profit margin is an impressive 72.52% for the same period, which suggests that the company has been effective in managing its cost of goods sold and maintaining profitability. This is a critical factor when considering the financial implications of the SuperPlay acquisition. Additionally, InvestingPro Tips highlight that analysts predict Playtika will be profitable this year and note that the company has been profitable over the last twelve months, which aligns with the positive gross profit margin data.
For investors seeking more insights, there are additional InvestingPro Tips available at https://www.investing.com/pro/PLTK, which can provide a deeper analysis of Playtika's financial health and market potential. As the company navigates this acquisition, these metrics and insights could prove valuable for stakeholders assessing Playtika's future in the competitive mobile gaming industry.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.