The old saying about how when it rains, it pours isn’t always true. But when it is, it’s a doozy; just ask Playtika (NASDAQ:PLTK). This video game stock saw share prices drop in Thursday afternoon’s trading as multiple issues hit the stock all at once.
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The biggest hit to Playtika’s fortunes likely came from Omar Dessouky, Bank of America analyst. Dessouky downgraded Playtika’s ranking to “Underperform,” citing its lackluster free cash flow. Indeed, Dessouky also declared Playtika’s fall “…an excellent opportunity to reallocate out of mobile gaming.” This is something of a contrarian path to take, as mobile gaming is considered resistant to recessions. But Dessouky went on to address that, noting that a likely recession starting this June would cut consumer spending.
That wasn’t the only hit that Playtika took, though; one of Playtika’s biggest owners, On Chau—who held 10% of Playtika—sold 300,000 shares. That brought On Chau around $3.52 million and left Playtika in the lurch. However, there are signs that there’s interest in buying Playtika, particularly from private equity firms. Just recently, Playtika shares surged on wildly inflated daily averages—about four times normal—that tipped off some potential interest. While reports weren’t conclusive about who was so interested—“Angry Birds” maker Rovio Entertainment was mentioned in one Casino.org report—the possibility remains.
Aside from the now clearly pessimistic Dessouky, analysts remain fairly split on the matter. Currently, analyst consensus calls Playtika stock a Moderate Buy with 15.04% upside potential thanks to its average price target of $12.89.
