$MYPS- net cash shrinking business with harvesting in play

At the graveyard of despacs, this has caught my eye recently. Disclaimer: own a massive position in this net-net. Thesis enhanced by AI. This despacced at 10$, just reverse splitted, and trades at a 96% decline to despac price. This is a melting iceberg of a stock, but the combination of enormous amount of cash(95M currently. no real long term debt) and an active buyback program that could buy the whole float, I am interested. Earlier this year there was a bounce from 40 to 85 cents, so there can definitely be space for a re-rating. The thesis is here not a bounce in revenue, but the idea that cost cutting can stabilize the business enough so operating cashflow can cover all costs as well as buyback a few million of shares per quarter, therefore shrinking the float and boosting the price. I am thinking the longer term numbers of this stock should be around 180M revenue, 15-20% EBITDA Margin, positive operating cashflows, and continuning stock repurchases raising cash per shares accordingly. **What does PLAYSTUDIOS do?** PLAYSTUDIOS develops free-to-play mobile games, primarily social casino games such as myVEGAS Slots, POP! Slots, myKONAMI Slots and MGM Slots Live. The games use virtual currencies rather than real-money gambling. Revenue comes largely from in-app purchases and advertising. One distinguishing feature is the playAWARDS loyalty program, through which players can earn points and redeem them for real-world rewards, including hotel stays, dining and entertainment. The company also operates casual games, including Tetris and Solitaire titles. The problem is that its established social casino portfolio is mature and declining. Attempts to introduce new growth drivers haven't been particularly successful. The company recently decided to shut down Tetris Block Party, while also pulling back from other initiatives that weren't delivering sufficient returns. **Market capitalization and cash** As of October 9, MYPS closed at $4.11, giving it a market cap of approximately $49.4 million. The latest reported balance sheet, from June 30, 2026, showed: * Cash and equivalents: $102.7 million * Total current assets: $130.4 million * Total assets: $271.1 million * Total liabilities: $63.4 million * Shareholders' equity: $207.7 million The company also has no outstanding traditional bank debt. Its revolving credit facility expired in June 2026 without any outstanding borrowings. Obviously, comparing $49 million in market capitalization with $103 million of cash isn't sufficient on its own. There are other liabilities and future cash commitments, and I think it's important to account for them rather than pretend all that money belongs to shareholders. **Minimum guarantees, contingent consideration and other liabilities** The minimum guarantees are probably the most straightforward obligation to understand. PLAYSTUDIOS has contractual minimum royalty payments connected to content licensing agreements. As of June 30, these totaled $19.425 million, with the following payment schedule: * Remaining 2026: $7.425 million * 2027: $6 million * 2028: $6 million These are actual contractual commitments and will consume cash over time. They're not optional, and I wouldn't ignore them when estimating the value of the company's cash position. Next is contingent consideration, mainly related to the acquisition of Pixode. The acquisition agreement allows for additional payments tied to certain revenue and performance milestones, with a theoretical maximum of $113.5 million over three years. That number looks frightening until you examine how the arrangement works. The maximum is conditional on the acquired business achieving certain milestones. As of June 30, the fair value of this liability on the balance sheet was approximately $8 million. With Tetris Block Party now being discontinued, management is reassessing the contingent consideration. I suspect the eventual payment could be lower, but we'll have to wait for the next quarterly report to see how that develops. The $8 million is an accounting estimate, not a guaranteed settlement amount or a cap. There are also approximately $5.45 million in operating lease liabilities. So taking the three main categories together: * Minimum guarantees: $19.425 million * Contingent consideration: $8.008 million * Lease liabilities: $5.451 million That's approximately $32.9 million in combined obligations. Subtracting these from June's $102.7 million cash balance leaves around $69.8 million. To be clear, that's not a liquidation valuation or an official net cash figure. The company has other liabilities, including accounts payable, accrued expenses and legal exposures. Conversely, it also has receivables and other assets. Some liabilities will be settled through normal business operations, and the contingent consideration could change substantially. The cash balance will also have changed since June, particularly given the share buybacks. **Share repurchases** Another interesting development is that management has started repurchasing shares more aggressively. The company disclosed purchases of approximately 4.1 million shares after June 30 for $3 million, plus a separate agreement to acquire 2.1 million shares for $2.4 million. These figures are from before the recent 1-for-10 reverse split. The remaining authorization under the regular buyback program was approximately $35.5 million after the disclosed subsequent purchases. Whether management actually uses a meaningful part of that authorization remains to be seen, but repurchasing stock below the company's conservatively adjusted cash position could create considerable value for remaining shareholders, assuming cash generation holds up. Revenue and profitability The business is clearly shrinking, and I don't want to pretend otherwise. Here are the reported numbers over the last six quarters: |Quarter|Revenue|Adjusted EBITDA| |:-|:-|:-| |Q1 2025|$62.7M|$12.5M| |Q2 2025|$59.3M|$10.7M| |Q3 2025|$57.6M|$7.2M| |Q4 2025|$55.4M|$5.1M| |Q1 2026|$58.4M|$3.6M| |Q2 2026|$55.0M|$7.3M| This is where the harvesting thesis comes in. PLAYSTUDIOS doesn't necessarily need to return to revenue growth to create shareholder value at the current valuation. If management can stabilize margins, reduce unnecessary spending and generate consistent cash flow from its established games, there could still be considerable value in the business. Disclaimer: Do your own DD. Sources: all SEC filings https://elmerspud.substack.com/p/frontrunning-the-biggest-little-buyback https://www.mrdeepvalue.com/p/playstudios-myps-analysis?r=1vad5u