ASX:PLY
Playside Studios Ltd
Investment Summary
The fund managers believe that Playside Studios Ltd shows significant potential despite recent share price fluctuations. In their opinion, the company has demonstrated impressive financial performance, with reported revenues of $65m in FY24, driven by strong customer relationships with industry giants like Activision Blizzard, Meta, and Netflix. The fund managers also note that Playside's ownership structure, with executives holding significant stakes, reflects strong alignment of interests. Despite a recent revision of FY25 revenue forecasts from $65m to $52m, the fund managers see inherent value given the substantial growth from $10m in FY21 to the current levels, suggesting the stock is undervalued. Fergie highlights Playside as a notable player in the gaming industry, with potential for recovery as market perceptions shift. Overall, the fund managers remain cautiously optimistic about the company's future prospects.
Commentary From The Managers
Cyan Investment Management
31 Jan 2025
$0.22
- Cyan Investment Management sold their investment in Playside due to a significant forecast revenue pullback from ~$65m to ~$52m for FY25.
- The revised revenue largely stemmed from "Work for Hire" projects, which were previously viewed as stable and predictable.
- Major clients included Activision Blizzard, 2K Games, Meta, and Netflix, raising expectations for reliable revenue streams.
- The market reacted sharply to the news, reflecting a disconnect between perception and reality regarding the company's performance.
- This was not the first misstep for Playside; Cyan Investment Management had been gradually reducing their position during stock strength over the past two years.
- The initial investment was made pre-IPO at $0.16 in late 2020, and the company listed at $0.20 with forecast revenues of ~$10m for FY21.
- Despite a 5x revenue growth by FY25, Playside's stock trades at a price comparable to its IPO, highlighting potential inherent value.
- Market confidence may take time to rebuild, affecting the stock's recovery and management perception.
Cyan Investment Management
31 Aug 2024
$0.58
- Cyan Investment Management continues to hold its position in Playside Studios Ltd.
- The company reported outstanding results for FY24.
- Revenue increased by 70% to $65 million.
- EBITDA reached $18 million.
- Playside maintains a net cash position of $37 million.
- The recent share price decline of -19% appears disproportionate to the financial results.
- The reasons for the price movement are unclear, potentially linked to weakness in the US tech space.
- Playside has significant clients such as Netflix, Meta, and Activision Blizzard.
Cyan Investment Management
10 Apr 2024
$0.92
- Cyan Investment Management nominates Playside Studios Ltd as a top stock pick in the past decade.
- Fergie initially bought into Playside at its IPO in late 2020.
- The position has been expanded over time as the company has demonstrated its capabilities.
- Playside is considered an outlier in the gaming industry, known for high turnover.
- The company has established significant partnerships with major clients, including Facebook parent Meta, Activision, and Blizzard.
- Upon acquiring Playside, Cyan Investment Management noted strong revenue and a clear path to profitability.
- Executive ownership is robust, with three executives each holding around 20%, indicating strong alignment with shareholders.
- The stock experienced volatility, peaking at $1.20 during the NFT trend, generating $10 million in a single quarter.
- Currently, the stock price is approximately 90 cents, representing significant growth since Cyan Investment Management first invested.
Cyan Investment Management
29 Feb 2024
$0.90
- Playside Studios has emerged as a strong performer with a 23% increase in value for the month.
- The company reported a remarkable 119% revenue growth, reaching $36.2m.
- EBITDA reached $12.2m, showcasing operational efficiency.
- Net operating cash flow stood at $12.8m, indicating strong liquidity.
- All segments of the business are performing well, underscoring operational strength.
- Cyan Investment Management notes strong investor support for Playside as it embarks on a multi-layered growth plan.
- The growth plan is targeted over the next 24 months to enhance overall performance.
Cyan Investment Management
31 Jan 2024
$0.73
- Playside Studios (PLY) has seen an impressive growth, recording a 17% increase in value during the month.
- The company delivered notable revenues of $23 million in the December quarter, resulting in positive operating cash flow of $11 million.
- PLY has upgraded its revenue guidance for FY24 to $60-65 million, which may still be considered conservative given recent performance.
- The acquisition of the license for the upcoming MOUSE game, a retro game based on the now off-patent Mickey Mouse brand, could further boost revenue and stock performance.
- Cyan Investment Management continues to hold a positive view on Playside Studios, citing strong quarterly sales and upcoming projects as key factors in their investment thesis.
Please note: The completeness, accuracy or current status of the investments referenced are not guaranteed.