Gaming developer Playtika launched an initial public offering (IPO) today, selling to the public 69,500,000 shares of its common stock. Earlier in the month, the company announced its intention to go public and list on the Nasdaq Global Select Market, expecting the offering price to be between $22 and $24, but today it initiated the IPO at $27 per share.
Investor Interest Tested
Playtika’s IPO is set to check on investor appetite for gaming stocks in a period when gaming is gaining popularity as people seek ways to distract themselves from the painful uncertainty regarding their reality and future lives.
The initial announcement was that Playtika would sell 21,700,000 shares of common stock and the rest 47,800,000 would be sold by an existing shareholder and the company will not receive any proceeds from the sale of the shares owned by the stockholder.
Playtika’s IPO saw 18,518,500 shares of common stock sold at $27 per share price allowing the social games developer company to acquire $499 million in net proceeds from the largest public offering in Israeli history, and set Playtika’s market valuation above the $10.7 billion of American mobile game developer Zynga.
The existing shareholder, Alpha Frontier, sold a bigger tranche than initially announced, 50,981,500, from which the consortium led by China’s Giant Investment Group which acquired Playtika in 2016 would gain $1.66 billion if the allotment is sold in full. The group’s owner, Shi Yuzhu, is set to keep his controlling stake at the company after the public offering.
Within 30 days of the IPO, the underwriters will have the option to acquire additionally 10,425,000 from the shares held by the stockholder at the IPO price after underwriting discount and commission expenses are covered.
Revenues Dependent on In-App Purchases
Playtika generated through its social casino games $2.3 billion in revenues for the past 12 months, but it also sits on the same amount of debt. According to its chief financial officer Graig Abrahams, the company has $400 million of cash on its balance sheet and the debt to cash ratio of 2.4 is more than manageable.
Playtika, which currently has its mobile platform account for 80% of the company’s revenues, with the other 20% coming from the web, has 35 million active users and generates 95% of its revenue from in-app purchases, with Slotomania and its 1.5 million daily active users standing out as the game making the most.
The latest IPO follows on the 2020 trend of public offerings which saw 18 video gaming companies, including Unity Software, Skillz, and Kakao Games, raise $2.8 billion, and it surely would not be the last as other companies have already lined up to offer their stock to the public.