MYPS: Reverse Split Path Will Support Future Listing Compliance

Analysts have reduced their fair value estimate for PLAYSTUDIOS from $1.75 to $0.50, citing a lower assumed P/E multiple, slightly softer discount rate and revenue expectations, and a modestly higher profit margin outlook.

What’s in the News for PLAYSTUDIOS

PLAYSTUDIOS has scheduled its annual meeting of stockholders for July 10, 2026, and is asking investors to vote on an amendment to its Certificate of Incorporation that would allow the Board to implement a reverse stock split of Class A and Class B common stock at a ratio between 1-for-10 and 1-for-30, at its discretion, within 12 months following the meeting. (Source: Key Developments)
The company previously received a notice from the Nasdaq Listing Qualifications Department stating that PLAYSTUDIOS was not in compliance with Nasdaq Listing Rule 5450(a)(1) because its Class A common stock closing bid price was below US$1.00 for 30 consecutive business days. (Source: Key Developments)
PLAYSTUDIOS applied on April 7, 2026, to transfer the listing of its securities from the Nasdaq Global Market to the Nasdaq Capital Market and requested an additional 180 day period to meet the minimum bid price requirement. (Source: Key Developments)
Nasdaq staff approved the transfer to the Nasdaq Capital Market, effective May 6, 2026, and granted PLAYSTUDIOS a second 180 day compliance period, expiring November 2, 2026, to regain compliance by having a closing bid price of at least US$1.00 for 10 consecutive business days, with a reverse stock split identified by the company as one potential option to address the issue. (Source: Key Developments)
If PLAYSTUDIOS does not regain compliance by November 2, 2026, or does not meet the terms of the extension, Nasdaq staff may issue a notice that the securities are subject to delisting. The company could appeal this decision to a Nasdaq Hearings Panel, although there is no assurance of success. (Source: Key Developments)

Valuation Changes for PLAYSTUDIOS

Fair Value: Reduced from $1.75 to $0.50, a large cut in the analyst fair value estimate for PLAYSTUDIOS.
Discount Rate: Adjusted slightly lower from 9.23% to 8.90%, reflecting a modest change in the rate used to discount future cash flows.
Revenue Growth: The assumed annual revenue change moved from a decline of 2.60% to a smaller decline of 2.39%, indicating a slightly less negative outlook for reported dollar revenue trends.
Net Profit Margin: Updated from 10.26% to 11.10%, implying a moderately higher expected dollar earnings margin over time.
Future P/E: Lowered significantly from 10.34x to 3.71x, indicating a much lower earnings multiple applied in the new valuation framework.

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Catalysts

About PLAYSTUDIOS

PLAYSTUDIOS develops mobile and online games that link virtual play with real-world rewards through its playAWARDS loyalty platform.

What are the underlying business or industry changes driving this perspective?

Expansion of Win Zone across all eligible U.S. jurisdictions, combined with data driven user acquisition once metrics are validated, can increase chip sales and fee based sweepstakes revenue. This would support top line growth and potentially higher earnings.
The planned broader rollout of Tetris Block Party, using a globally recognized brand and a deeper social meta game, can capture a wider puzzle gaming audience and extend player lifetimes. This would primarily support revenue and, if scaled efficiently, EBITDA.
Growth in direct to consumer transactions, already at US$7.7 million and 16.7% of in app purchase revenue, reduces platform fees and can lift gross margin and operating margin as this channel becomes a larger share of sales.
Ongoing optimization of ad monetization technology in the casual portfolio, which has already supported ARPDAU in Brainium and Tetris Prime, can partially offset DAU pressure and provide a higher margin revenue mix, helping EBITDA resilience.
Broader use of AI across game development, UA modeling and live operations can lower production and operating costs per title over time. This may support net margins even if headline revenue growth remains constrained.

NasdaqGM:MYPS Earnings & Revenue Growth as at Jan 2026

Assumptions

How have these above catalysts been quantified?

Analysts are assuming PLAYSTUDIOS's revenue will decrease by 2.4% annually over the next 3 years.
Analysts are not forecasting that PLAYSTUDIOS will become profitable in next 3 years. To represent the Analyst Price Target as a Future PE Valuation we will estimate PLAYSTUDIOS's profit margin will increase from -15.8% to the average US Entertainment industry of 11.1% in 3 years.
If PLAYSTUDIOS's profit margin were to converge on the industry average, you could expect earnings to reach $23.8 million (and earnings per share of $0.17) by about June 2029, up from -$36.4 million today.
In order for the above numbers to justify the price target of the analysts, the company would need to trade at a PE ratio of 3.7x on those 2029 earnings, up from -1.6x today. This future PE is lower than the current PE for the US Entertainment industry at 22.7x.
Analysts expect the number of shares outstanding to grow by 2.4% per year for the next 3 years.
To value all of this in today's terms, we will use a discount rate of 8.9%, as per the Simply Wall St company report.

Risks

What could happen that would invalidate this narrative?

The social casino category is under pressure and PLAYSTUDIOS is already seeing year over year declines in DAU, MAU and ARPDAU across most of the portfolio. If this long term shift toward alternative formats like sweepstakes continues or accelerates, revenue from the core playGAMES business could keep contracting and weigh on earnings.
Management cut fixed costs to protect profitability, but this has reduced the pace of new content, live operations and product development. If this leaner model limits the company’s ability to keep games fresh versus competitors over several years, it could hurt player engagement, chip sales and ultimately net margins.
New growth projects such as Win Zone sweepstakes and Tetris Block Party are still in test phases and rely on broader regulatory and market acceptance. If player cohorts monetize below expectations, regulations further shrink the sweepstakes total addressable market or user acquisition becomes more expensive, the payoff from these initiatives might not offset current declines in the core portfolio and could pressure earnings.
Casual titles are already facing DAU pressure and the company is leaning more on ad monetization and direct to consumer channels, which depend on stable advertiser demand and platform policies. Any long term reset in mobile ad pricing or tighter platform rules on off store payments could limit ARPDAU gains and restrict improvement in gross margin and operating margin.
The company’s valuation is close to its cash balance and management is considering both organic changes and M&A. If future acquisitions, sweepstakes expansion or partnerships in iGaming or content distribution do not deliver sufficient returns on invested capital, shareholders could see dilution of cash resources without a corresponding lift in revenue or EBITDA.

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Valuation

How have all the factors above been brought together to estimate a fair value?

The analysts have a consensus price target of $0.5 for PLAYSTUDIOS based on their expectations of its future earnings growth, profit margins and other risk factors.
In order for you to agree with the analysts, you'd need to believe that by 2029, revenues will be $214.6 million, earnings will come to $23.8 million, and it would be trading on a PE ratio of 3.7x, assuming you use a discount rate of 8.9%.
Given the current share price of $0.44, the analyst price target of $0.5 is 12.0% higher.
We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.

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Disclaimer

AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.

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