Pomerantz Appointed Lead Counsel in PLAYSTUDIOS Securities Litigation
On July 12, 2022, U.S. District Judge Vince Chhabria of the Northern District of California appointed Pomerantz LLP as Lead Counsel on behalf of The Phoenix Insurance Company Ltd. and The Phoenix Provident Pension Fund Ltd. – the Lead Plaintiffs, and the class, in Felipe v. Playstudios, Inc., 22-cv-2164 (N.D. Cal.). This securities action alleges that PLAYSTUDIOS, Inc. ("PLAYSTUDIOS" or the "Company") misled investors and the market about the state of development, financial prospects and future projections for Kingdom Boss, its flagship game.
PLAYSTUDIOS is a developer and publisher of free-to-play casual games for mobile and social platforms. The Company was formed through a merger (the “Merger”) between Playstudios (“Old Playstudios”) and Acies Acquisition Corp. (“Acies”) – a “blank check” special purpose acquisition company (“SPAC”). PLAYSTUDIOS flagship product offering was a highly anticipated game entitled Kingdom Boss.
Allegations against PLAYSTUDIOS include that: (i) the Company failed to disclose that it had encountered difficulties in the design and implementation of Kingdom Boss; (ii) as a result, the launch of Kingdom Boss was likely to be substantially delayed; (iii) as a result of the foregoing, PLAYSTUDIOS’ projected revenues and profits were inflated and unreliable; and (iv) as a result, the price of the Company’s securities were artificially inflated.
The truth began to emerge on August 11, 2021, when PLAYSTUDIOS announced its Q2, 2021 financial results in which it revealed for the first time that that the launch of Kingdom Boss was being delayed until later in the year and investors should expect decreased revenues and profits during the year as a result. Specifically, the Company stated that it “expects its full-year 2021 revenue to be in the range of $290 million to $300 million,” which was $28–38 million less than what was projected and reflected in the Offering Documents for the Merger between Old Playstudios and Acies. Further, projected revenues for 2022 were estimated to be approximately $374 million – which was $61 million less than what was projected and reflected in the Merger’s Offering Documents.
On this news, PLAYSTUDIOS’ share price fell by 11.5%.
Then, on February 24, 2022, PLAYSTUDIOS filed its annual report for 2021 with the SEC and issued a press release summarizing its financial results for the fourth quarter and full year 2021. During an earnings call that same day, the Company’s CEO Pascal disclosed that Kingdom Boss would not be launched at all, stating that the [Kingdom Boss] had “struggled to achieve all the criteria that were established for a full-scale launch even after making the game available in North America late in the fourth quarter. And while Boss Fight [the developer] has consistently assured us that, based on their experience, the product is on a constructive path, currently, we’ve elected to suspend development and reevaluate our options.”
On this news, PLAYSTUDIOS’ share price fell a further 4.7%.
Two days later, on February 26, 2022, PLAYSTUDIOS announced that the release of Kingdom Boss was indefinitely “suspended.”