PlayStudios has gotten torched over the last six months - since January 2025, its stock price has dropped 33.9% to $1.25 per share. This may have investors wondering how to approach the situation.
Is now the time to buy PlayStudios, or should you be careful about including it in your portfolio? Dive into our full research report to see our analyst team’s opinion, it’s free.
Why Is PlayStudios Not Exciting?
Even though the stock has become cheaper, we don't have much confidence in PlayStudios. Here are three reasons why there are better opportunities than MYPS and a stock we'd rather own.
1. Long-Term Revenue Growth Disappoints
Reviewing a company’s long-term sales performance reveals insights into its quality. Any business can put up a good quarter or two, but many enduring ones grow for years. Unfortunately, PlayStudios’s 2.6% annualized revenue growth over the last five years was weak. This was below our standards.
2. Operating Losses Sound the Alarms
Operating margin is an important measure of profitability as it shows the portion of revenue left after accounting for all core expenses – everything from the cost of goods sold to advertising and wages. It’s also useful for comparing profitability across companies with different levels of debt and tax rates because it excludes interest and taxes.
PlayStudios’s operating margin has been trending down over the last 12 months and averaged negative 7.5% over the last two years. Unprofitable consumer discretionary companies with falling margins deserve extra scrutiny because they’re spending loads of money to stay relevant, an unsustainable practice.
3. Previous Growth Initiatives Have Lost Money
Growth gives us insight into a company’s long-term potential, but how capital-efficient was that growth? Enter ROIC, a metric showing how much operating profit a company generates relative to the money it has raised (debt and equity).
PlayStudios’s five-year average ROIC was negative 16.2%, meaning management lost money while trying to expand the business. Its returns were among the worst in the consumer discretionary sector.
Final Judgment
PlayStudios isn’t a terrible business, but it isn’t one of our picks. After the recent drawdown, the stock trades at 3× forward EV-to-EBITDA (or $1.25 per share). This valuation multiple is fair, but we don’t have much faith in the company. We're pretty confident there are more exciting stocks to buy at the moment. Let us point you toward one of our all-time favorite software stocks.
Stocks We Like More Than PlayStudios
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