In the tech sector, layoff announcements are becoming more commonplace. For Israeli mobile gaming company Playtika (NASDAQ:PLTK), this trend is playing out once again. Today, PLTK stock is down about 2% in afternoon trading as the company announced its latest round of layoffs. This round will see 300-400 employees lose their jobs.
This is a significant cut for the company and amounts to roughly 10% of its workforce. Notably, Playtika announced a previous round of layoffs in 2022, in which 900 employees were let go. Accordingly, in the search for efficiencies, this is a tech company that hasn’t been afraid to cut costs.
Unfortunately, the market appears to be taking this news negatively today. Given the downward trajectory of PLTK stock over the past two years, declining fundamentals appear to be the bigger story, overshadowing these cost-cutting moves.
Let’s dive more into the announcement and what investors may want to watch moving forward.
PLTK Stock Sinks on Layoffs Announcement
Not all layoff announcements are viewed the same way by investors. That’s because, based on a company’s size and growth profile, reducing headcount can lead to slower growth over time and carries with it significant up-front costs that impact the company’s upcoming results.
Accordingly, the question with these job cuts really comes down to how bloated Playtika was to begin with and which jobs will be affected. The company has said it’s “attempting to balance its internal teams and redeploy talent to create a more efficient pipeline.” However, what that ultimately means is up to interpretation.
Notably, Playtime’s revenue and earnings have declined over the past year, with Q3 results showing top- and bottom-line deceleration of 2.7% and 44.4%, respectively. While the company does appear to have a strong cash buffer, these layoffs will eat up some of that. Accordingly, for investors looking for growth, it appears many are taking their search elsewhere right now.
On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
