Playstudios (NASDAQ: MYPS), a producer of social casinos, had a spike in its shares during Tuesday's after-hours trading session following its announcement that it would buy back $24.6 million of Microsoft's (NASDAQ: MSFT) ownership.

The decision to buy Microsoft's shares has the benefit of lowering Playstudios' outstanding share count, even if it is not a standard share repurchase program. The company stated that the Microsoft acquisition will result in an 8.6% decrease in count.

"Shares were purchased at a price of $2.11 per share and funded with available cash. Total consideration paid by PLAYSTUDIOS was $24.6 million. The repurchase reduces the number of shares of the Company’s outstanding common stock by approximately 8.6%,” according to a statement issued by Las Vegas-based Playstudios.

Shares of Playstudios are off 48.9% over the past 12 months and 15.5% on a year-to-date basis.

 

Playstudios Quietly Buys Back a Lot of Stock

Playstudios became a freestanding public company in June 2021 after a merger with Acies Acquisition, a blank-check firm started by former MGM Resorts International (NYSE: MGM) CEO Jim Murren.

Over those three years, the stock has struggled mightily, but management has signaled it sees value in the shares. In addition to the transaction with Microsoft, Playstudios is in the midst of a $50 million share buyback program.

“Since becoming a public company, PLAYSTUDIOS has demonstrated a commitment to enhancing shareholder value and maximizing our returns on capital. Purchasing the shares held by Microsoft is a further example of this as we were able to efficiently repurchase 8.6% of our outstanding common stock at a discount to current market prices,” said CEO Andrew Pascal in the statement.

Playstudios, the developer of games like myVegas Blackjack and Slots, has playAwards, a reward program of its own. Players can exchange those points for services and housing at MGM properties, which include opulent establishments like Mandalay Bay, Aria, and Bellagio on the Las Vegas Strip in addition to a few of the operator's local casinos.

 

Other Elements That Encourage Playstudios

Despite the prolonged decline in Playstudios' shares and the lack of interest from Wall Street in the company, there are a few positive aspects that can support the investment thesis.

The business is profitable, operates in a rapidly expanding industry, and has no debt. has $133 million in cash on hand, or around 40% of its current market valuation, as analyst Sandeep David has reported. That suggests that the stock is receiving virtually no credit for such inventory.

Though Playstudios hasn't officially announced that it will, David pointed out that the company's financial situation might rise on a regular basis, opening the door for the company to pay out a special dividend.