Playtika offered to pay $11.58 per share, which is above the price the social gaming business has traded at for the majority of the month, to acquire 51.8 million shares. This is around 12.6% of Playtika’s issued share capital.
As is typical for share repurchases, the shares will be cancelled immediately.
Upon the announcement, Playtika’s share price rose sharply, opening today (4 October) at the purchase price of $11.58. This was up 16.4% from closing on Monday. It then declined from there, but remains notably above the previous day’s closing price at $10.80 at the time of writing.
This rise has helped to offset declines that occurred earlier in the year.
Since Playtika’s $1.67bn initial public offering (IPO) in January 2021, the company has lost a large amount of its share value. Since the stock price peak in February of that year at $33.81, the share price has steadily declined to a low of $9.39 on 30 September, a 72% fall.
The goal of a share repurchase is often to return cash to shareholders. Companies have the option of buying back shares instead of increasing cash dividends; the process can offer the business’ management more flexibility than cash dividends by not setting expectations that more cash will be returned at specific times in the future.
In Playtika’s Q2 financial report, the company’s revenues remained steady, while EBITDA and net income declined – with the business blaming “the challenging economic environment”.
“We delivered strong revenue growth as a result of our continual efforts to improve and refine our monetisation programme and increase retention of our players,” said company founder and CEO Robert Antokol.
“We continue to lay the groundwork for future growth by making investments in the business to support new game development, recent acquisitions, offline marketing campaigns and investments in our workforce,” added Craig Abrahams, president and CFO.
“These investments in marketing are weighted more heavily to the start of the year and will position the company well for sustainable growth.”