Over the last six months, PlayStudios’s shares have sunk to $1.96, producing a disappointing 5.3% loss - a stark contrast to the S&P 500’s 9.4% gain. This might have investors contemplating their next move.
Is now the time to buy PlayStudios, or should you be careful about including it in your portfolio? Get the full stock story straight from our expert analysts, it’s free.
Even with the cheaper entry price, we're swiping left on PlayStudios for now. Here are three reasons why you should be careful with MYPS and a stock we'd rather own.
Why Do We Think PlayStudios Will Underperform?
Founded by a team of former gaming industry executives, PlayStudios (NASDAQ:MYPS) offers free-to-play digital casino games.
1. Long-Term Revenue Growth Disappoints
A company’s long-term sales performance signals its overall quality. Even a bad business can shine for one or two quarters, but a top-tier one grows for years. Over the last four years, PlayStudios grew its sales at a sluggish 3.3% compounded annual growth rate. This fell short of our benchmark for the consumer discretionary sector.

2. EPS Trending Down
We track the long-term change in earnings per share (EPS) because it highlights whether a company’s growth is profitable.
Sadly for PlayStudios, its EPS declined by 29.4% annually over the last four years while its revenue grew by 3.3%. This tells us the company became less profitable on a per-share basis as it expanded.

3. Operating Losses
Operating margin is a key measure of profitability. Think of it as net income - the bottom line - excluding the impact of taxes and interest on debt, which are less connected to business fundamentals.
PlayStudios’s operating margin might have seen some fluctuations over the last 12 months but has remained more or less the same, averaging negative 4.1% over the last two years. Unprofitable consumer discretionary companies that fail to improve their losses or grow sales rapidly deserve extra scrutiny. For the time being, it’s unclear if PlayStudios’s business model is sustainable.
Correction: The previous version of this article incorrectly stated that PlayStudios (MYPS) net debt is $11b as of Q3 2024. PlayStudios (MYPS) debt is $11m as of Q3 2024. We consider PlayStudios to be a well-capitalized company with a $94.17 million net cash position.
Final Judgment
PlayStudios falls short of our quality standards. After the recent drawdown, the stock trades at 3.8× forward EV-to-EBITDA (or $1.96 per share). While this valuation is reasonable, we don’t see a big opportunity at the moment. There are superior stocks to buy right now. We’d recommend looking at an all-weather company that owns household favorite Taco Bell.
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