Wedbush cuts Playtika, but stands firm on AppLovin and Unity after sell-off
Last updated: 14:45 02 Mar 2026 EST, First published: 14:31 02 Mar 2026 EST
US broker sees post-earnings declines as overdone for adtech stocks, while mobile gaming group faces cash flow squeeze
Wedbush Securities, the US investment bank, has downgraded Playtika, the Israeli mobile games company, to 'neutral' from 'outperform', citing a deepening conflict between its acquisition-related payment obligations and an approaching debt refinancing deadline.
The broker's analysts said Playtika faces $734 million in remaining earnout payments linked to its acquisition of SuperPlay, a mobile gaming studio, which it expects to effectively wipe out free cash flow available to equity holders in 2026.
With debt maturities falling in 2027 and 2028, Wedbush concluded that Playtika cannot reduce its debt load organically without curtailing shareholder returns, a concern underlined by the company's recent decision to suspend its quarterly dividend.
The downgrade forms part of Wedbush's March note on entertainment software stocks, which is largely focused on how investors should position themselves following sharp share price declines across the adtech sector after fourth-quarter earnings reports.
Unity Software Inc (NYSE:U), the games engine and mobile advertising company, fell 37% over the period covered by the report, making it the worst performer in Wedbush's video game index, while AppLovin Corp (NASDAQ:APP), the mobile marketing platform, dropped 8%.
Despite those falls, Wedbush maintained outperform ratings on both companies, arguing that the market has applied an unjustifiably high risk premium to each.
AppLovin's move into ecommerce advertising, which has been slower than some investors expected, was characterised by the analysts as deliberate rather than hesitant, with a full recovery anticipated as it builds out that business through the year.
Unity's steeper decline was attributed to soft first-quarter guidance and its withdrawal from the in-app bidding market, an automated system through which advertisers compete in real time for ad placements, which is dominated by AppLovin's MAX product.
Wedbush said Unity could still generate meaningful revenue by licensing its advertising data to brand advertisers without needing to win that competitive battle outright.
The bank also retained its outperform rating on Take-Two Interactive Software, the video games publisher behind the Grand Theft Auto franchise, despite a post-earnings share price decline it described as puzzling given strong third-quarter results, raised full-year guidance, and confirmation of a November release date for GTA VI.
Roblox Corp (NYSE:RBLX), the online gaming platform, was highlighted for a jump in daily active user growth from 12% to 18% in the week ending 22 February, though Wedbush attributed much of the acceleration to US school holiday seasonality rather than a structural shift.
