What Happened:
Shares of digital casino game platform PlayStudios (NASDAQ:MYPS) fell 21.5% in the morning session after the company reported second quarter earnings results. Its full-year revenue guidance was lowered and revenue and EPS fell short of Wall Street's estimates during the quarter. The company called out "persistent industry weakness," which affected some of its game portfolio, and these weaknesses are expected to persist for the rest of the year. Overall, this was a bad quarter for PlayStudios.
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What is the market telling us:
PlayStudios's shares are not very volatile than the market average and over the last year have had only 23 moves greater than 5%. Moves this big are very rare for PlayStudios and that is indicating to us that this news had a significant impact on the market's perception of the business.
The biggest move we wrote about over the last year was 5 months ago, when the stock gained 7.7% on the news that the company reported fourth quarter results with revenue and adjusted EBITDA outperforming Wall Street's estimates.
On the other hand, its revenue growth regrettably slowed. The topline benefitted from strength in the advertising segment, more than offsetting the "contraction in the mobile games industry." Monetization also improved, with average revenue per daily active users up 3%, coming in well ahead of expectations.
Moving on, guidance seemed fine even though it wasn't too exciting, with full year revenue and adjusted EBITDA guidance relatively in line with expectations. Zooming out, this was still a decent, albeit mixed, quarter, showing that the company is staying on track.
PlayStudios is down 34.9% since the beginning of the year, and at $1.70 per share it is trading 57.3% below its 52-week high of $3.98 from August 2023.
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