The mobile gaming industry is rapidly growing as internet access spreads and smartphone ownership rises worldwide. In 2024, the sector saw strong growth, with consumer revenue surpassing $80 billion, reflecting a 4% increase from 2023 and underscoring the industry's expanding global popularity.
Additionally, with 91% of American citizens owning a smartphone and generally cheaper internet plan costs, mobile games have become the favorite pastime of a vast majority of the population. In addition, modern technologies like augmented reality (AR) and virtual reality (VR) have also enhanced the mobile gaming experience, resulting in a growth in the player base.
Amid this growth, Playtika Holding Corp. (PLTK) seems to be well-positioned to capitalize on the sector’s growing momentum. Reflecting its strong market position and growth potential, PLTK’s stock has climbed 5.4% over the past month and 6.8% over the past six months, closing its latest trading session at $7.38.
Now, let us discuss the factors that could affect the stock’s growth trajectory.
Recent Developments
On December 20, 2024, PLTK announced a partnership with International Game Technology PLC (IGT), a global gaming leader, to bring several of IGT’s most popular renowned slot themes to PLTK’s category-leading social casino games.
The partnership offers players an exciting new way to enjoy their favorite casino slots virtually, free of charge. This could enhance PLTK’s consumer growth.
On November 20, 2024, PLTK completed the acquisition of SuperPlay, a mobile gaming company based in Tel Aviv, Israel, and developer of hit mobile games Dice Dreams and Domino Dreams.
The acquisition expands the company’s portfolio of offerings by including Dice Dreams and Domino Dreams, two very popular games, as well as two additional games under development.
Strong Financials
For the fiscal third quarter that ended September 30, 2024, PLTK’s revenues came in at $620.80 million. Its income from operations increased 8.3% year-over-year to $97.50 million.
Additionally, net income and net income per share attributable to common stockholders rose 3.7% and 10% from the previous year’s quarter to $39.30 million and $0.11, respectively. As of September 30, 2024, PLTK’s total current assets amounted to $1.47 billion, compared to $1.35 billion on December 31, 2023.
Mixed Analyst Estimates
Analysts expect PLTK’s revenue for the fiscal 2024 fourth quarter, which ended in December 2024, to decrease 1.1% year-over-year to $631.02 million. Its EPS for the same quarter is expected to rise 72.3% year-over-year to $0.17.
Moreover, for the fiscal 2025 first quarter (ending in March), PLTK’s revenue and EPS are forecasted to increase 6.2% and 28.1% year-over-year to $691.40 million and $0.18, respectively.
High Profitability
PLTK’s trailing-12-month gross profit margin of 72.65% is 38.7% higher than the industry average of 52.37%. Its trailing-12-month EBITDA margin stands at 24.19%, 27.2% higher than the industry average of 19.02%.
In addition, the company boasts a trailing-12-month net income margin of 8.52%, which is 120.1% higher than the sector average of 3.87%. Also, the stock’s trailing-12-month levered FCF margin of 17.33% outperforms the industry average of 8.80% by 97%.
Discounted Valuation
PLTK is currently trading at a forward non-GAAP P/E of 7.61x, which is 47.8% lower than the industry average of 14.57x. Moreover, the stock’s forward EV/EBIT multiple stands at 8.79, 44.1% lower than the industry average of 15.74x.
Additionally, it has a forward Price/Sales multiple of 1.09, which is 21.5% lower than the industry average of 1.39x. This indicates that PLTK is undervalued compared to the broader market, offering potential upside for investors.
POWR Ratings Reflects Optimism
PLTK’s sound fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, which equates to a Buy in our proprietary rating system. The POWR Ratings are calculated by taking into account 118 different factors, with each factor weighted to an optimal degree.
PLTK has an A grade for Value, driven by its discounted valuation metrics relative to the industry average. Moreover, it earns a B grade for Quality, supported by profitability measures that exceeded industry benchmarks. The stock also holds a B grade for Stability, in line with its 60-month beta of 0.92.
Within the A-rated Entertainment – Toys & Video Games industry, PLTK is ranked #3 out of 18 stocks. Beyond what is stated above, we have also given PLTK grades for Sentiment, Momentum, and Growth. Get all PLTK ratings here.
Bottom Line
Fueled by partnerships and acquisitions that expand its portfolio of games available to consumers, PLTK has established itself as a titan in the mobile gaming industry. The increased range of games available could attract more players to the company’s platforms and expand its market presence even further.
PLTK’s solid financials, coupled with its high profitability, low valuation, and low volatility, place the stock in a lucrative position for investors.
How Does Playtika Holding Corp. (PLTK) Stack Up Against Its Peers?
Although PLTK’s near-term outlook appears sound, it may be worthwhile to explore its industry peers, who exhibit even stronger POWR Ratings. So, consider these A (Strong Buy) and B (Buy) rated stocks from the Entertainment – Toys & Video Games industry:
Electronic Arts Inc. (EA)
DoubleDown Interactive Co., Ltd. (DDI)
PLAYSTUDIOS, Inc. (MYPS)
To explore more A or B-rated Entertainment – Toys & Video Games stocks, click here.
What To Do Next?
Get your hands on this special report with 3 low priced companies with tremendous upside potential even in today’s volatile markets:
3 Stocks to DOUBLE This Year >
PLTK shares were unchanged in premarket trading Wednesday. Year-to-date, PLTK has gained 6.34%, versus a 4.34% rise in the benchmark S&P 500 index during the same period.
About the Author: Aritra_Gangopadhyay
Aritra is a financial journalist dedicated to breaking down complex financial topics into simple, actionable insights. Holding a Master’s degree in Economics, he uses his analytical expertise to help investors uncover unique opportunities for long-term success.
Is Playtika Holding Corp. (PLTK) Poised for Growth in the Mobile Gaming Industry? StockNews.com
