Playtika's (NASDAQ: PLTK) stock fell early on Wednesday after the mobile gaming business said that it would cut 15% of its personnel, costing between $12 million and $15 million.
In a Form 8-K filing with the Securities and Exchange Commission (SEC) on Wednesday, the Israeli company made the news, stating that it anticipates finishing the workforce reductions by the end of the current quarter.
"While the Plan is expected to result in operating expense efficiencies, the Company anticipates reinvesting a substantial portion of these expense reductions to advance growth initiatives. Accordingly, the impact on overall profitability will depend on timing and scope of these investment,” said the company in the regulatory document.
Robert Antokol, CEO of Playtika, stated in a letter to staff members that the layoffs are a part of a larger change intended to update the company's goals and possibly increase its focus on higher-growth games.
"It's Different This Time."
As evidenced by the stock's decline following the layoff announcement, investors don't seem to be impressed by Playtika's attempts to cut expenses and improve its selection of games.
In the approximately five years since the company's initial public offering (IPO), the shares have faltered and are down 47% in the last year. Monthly user growth and a reliance on a few games, like Bingo Blitz, Caesars Slots, Slotomania, and World Series of Poker (WSOP), have alarmed shareholders.
On the other hand, Antokol is promising a new era at the gaming company.
He stated in the letter to employees that Playtika must change its present cost structure in order to invest in future opportunities, adding that the company cannot afford to invest in both new games and established titles.
“We have faced difficult choices before, but this transformation marks a new chapter,” wrote Antokol. “By proactively reshaping our operating model, we are seizing the initiative to unlock new opportunities for growth, sharpen our focus, and build a foundation for durable success.”
Playtika Is Concentrating on Growth Titles
Focusing on growth games and utilizing the September 2024 announcement of the acquisition of SuperPlay are two aspects of Playtika's reorganization.
Due in part to the success of the previously stated Dice Dreams, SuperPlay may increase Playtika's revenue. Due in large part to the 2021 release of rival Monopoly Go, that game, which debuted in 2024, had already made over $400 million as of July!
“Growth titles take time to become profitable,” said Antokol in the letter. “By tightening our resources in mature areas now, we provide runway for our growth titles to succeed without jeopardizing our financial health.”
