Is the Skillz share price a watch?
Mobile game studios can use the platform owned by Skillz (NYSE: SKLZ) to turn their games into an electronic sport, using a more profitable monetization route than just advertising. They no longer have to worry about users ignoring ineffective ads as they now actively participate and pay for competitive games on their devices.
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In fact, the average revenue per user for games using Skillz is over $ 6 compared to less than $ 2 for advertising games. Of course, Skillz takes a share of every trade, which has resulted in tremendous revenue growth for the company. However, there is at least a year left before positive unadjusted earnings. So is Skillz a good investment today?
The Bull Affair for Skillz
According to the company’s Q1 2021 report, Skillz revenue is up 92%, gross profit is up 95%, and gross margin is up 100 basis points, year over year. other (YoY). Plus, she has no debt and over $ 600 million in cash. The company confidently raises its forecast for the year to $ 375 million, which would represent 63% year-over-year growth. In detail, Skillz saw an increase in Average Revenue Per User (ARPU), Paid Monthly Active Users (pMAU), and Global Gross Market Volume (GMV) to 86%, 81% and 85%, respectively.
Skillz has taken a real risk on its platform as esports has traditionally been relegated to consoles and PCs, but has found the risk paying off as evidenced by its growth. With 2.7 million monthly active users (MAU), Skillz has only tapped 1% of the 2.7 billion mobile users worldwide, which means it still has plenty of room to grow. On this front, the company plans to expand to India this year and ramp up its technology to move into racing, shooting and battle royale games; Furthermore, Skillz has expanded its Android footprint and increased revenue for Android users twice as fast as iOS. All of these factors will significantly boost the company’s addressable market.
Bear case for Skillz
Income may be up for Skillz, but so is the net loss, which rose 245%; in addition, adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) were down 113% year-on-year. Although the company emphasizes that its most important metric is its pMAUs, the underlying basis of this metric, the MAU, is growing very slowly and only increasing by 3.8%, year-on-year. The company also missed its consensus forecast for its EPS of $ 0.05, coming in at $ -0.15.
Skillz relies on three games for almost 65% of its total revenue and these games, Solitaire Cube, 21 Blitz and Backout Bingo are very similar to competing games existing in the market. The company is also taking a fifty percent developer discount for all sales on their platform, which is considerably higher than let’s say. Apples 30%. Skillz spends a lot of money on advertising which is a good thing, but it can potentially alienate future customers by using misleading statistics and pricing information. A failure in any of these areas would most certainly affect the company’s stock price.
So, is Skillz a good watch?
I think in the long run Skillz can be a good watch. Mobile games are all going to shift from ad revenue to esports and Skillz has the anti-cheat platform just for that purpose; Additionally, Apple’s recent tracking restriction puts a damper on all apps with targeted ads and will provide further tailwinds for the company. Skillz will continue to expand into more markets and offer more games and is expected to enter positive EBITDA territory sometime in 2022.
Rapid fire tower:
1. Who is the CEO of Skillz?
Co-founder Andrew Paradise
2. When did Skillz go public?
December 17, 2020, via a SPAC merger with Flying Eagle Acquisition Corp.
3. Which three countries have the most smartphone users?
China with 911 million; India with 440 million; and the United States with 270 million
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