(link)[https://elmerspud.substack.com/p/frontrunning-the-biggest-little-buyback]
Frontrunning the Biggest Little Buyback in History
Author Elmer Spud Elmer's Spudstack Frontrunning the Biggest Little Buyback in History I don't know if it's actually the biggest buyback in history, but (up to) 60% of shares outstanding seems like a lot. Elmer Spud May 29, 2026 In my investment account, I keep a harem of fallen SPACs. Sometimes there are legitimate business turnarounds, sometimes there are meme rallies, sometimes they continue to whither endlessly, but every so often there can be a catalyst that merits an increase in position.
Playstudios (MYPS) is a maker of mobile and web video games. As far as I can tell, they appear to be mostly of the brainrot variety, though there appears to also be some sort of the you-pay-money-you-get-rewards-but-its-not-called-gambling variety as well. The business has been middling along - in 2025 they burned $4 million of cash on $235 million of revenue. They cut some costs and now they are cutting some more costs which should pencil out to positive cash flow going forward (potentially a very meaningful amount compared to the ~$60m market cap), though when a stock is down 95% it’s hard to be confident about management’s outlook.
Anyway, that’s not super important.
What is important is that the company has a market cap of $60 million, cash of $100 million, little in the way of debt-like commitments, and thus has a negative enterprise value (EV).
That had been the case for a while, and always a little bit interesting, but now it is timely.
When the company reported Q1-26 results, management finally committed to turning on its buyback program. From the press release:
Share Repurchase Plan
As of March 31, 2026, the Company had $103.7 million of cash and cash equivalents. At recent trading prices, the Company believes its shares imply a negative enterprise value, presenting a compelling opportunity to repurchase stock. Accordingly, the Company intends to adopt a Rule 10b5-1 trading plan during the upcoming open trading window and repurchase shares of its Class A common stock under its remaining $40.0 million of authorization, subject to market conditions, applicable legal requirements, and other considerations.”
That language is updated from the prior “we’re thinking about it” as of Q4:
Liquidity and Capital Allocation
As of December 31, 2025, the Company had cash and cash equivalents of $104.9 million. The Company maintains a very strong liquidity position, which provides the flexibility to invest in its strategic priorities, manage through this period of business transition, and potentially return capital to shareholders.
PLAYSTUDIOS also noted that it has approximately $40 million remaining under its existing stock repurchase authorization and may consider additional repurchases once its trading window reopens following the release of its first quarter 2026 financial results.
So it seems like management has finally decided to pull the trigger. Is it because they are confident that the business has stabilized/inflected? Is it because they actually foresee cash generation of $20+ million/year (as implied by historical results + effect of latest round of cost cuts), and want the future stock price recovery to be even more dramatic? Is it because they want to dump some of their own bags at the ~$1/share of cash, rather than half of that? Time will tell.
But mechanically, if management follows through, buying back (up to) 60% of shares outstanding in a microcap company should drive the price meaningfully higher in the medium term. Share price has started to melt higher over the past few sessions - whether it is that the buyback has begun, or a few other jabronis like me have become aware of this situation and are hoping to front-run, is not yet known - but I think it not unreasonable that given the verbiage in the press release (“negative enterprise value”) if/when management starts slapping the ask, they may slowly bid it up until shares approach cash value (~$1/share).
If enough shares are retired at a low enough price it may become secondarily interesting as a turnaround play (i.e. still negative/zero EV, potentially [highly] cash generative), but that is not the purpose of today’s post.
For now, I’ve backed up the truck and, assuming management keeps their word, will be happy to sell them back their shares at 75 cents or $1 over the coming weeks/months.
Disclosure: Long, microcap, and never investing advice.
#long #thesis/buybacks #thesis/balance-sheet
date 2026-05-30