IB Net Payout Yields Model

Skillz: Back To Earth


  • Wolfpack Research released a short report on Skillz.
  • The recently closed SPAC deal was irrationally priced in the stock market with the market cap soaring above $20 billion at the highs.
  • The company must maintain 2021 revenue targets of $366 million despite the headwinds in mobile gaming.
  • Investors must avoid this stock due to valuation and especially if Wolfpack Research is accurate on the upcoming revenue misses.
  • This idea was discussed in more depth with members of my private investing community, Out Fox The Street. Learn More »

The upcoming Skillz (SKLZ) earnings report is important for not only the stock, but also the cooling SPAC space. A lot of the blank-check companies have made business combinations based on aggressive 2025+ revenue targets, yet very few of these companies have reported earnings since going public. The real-money gaming platform was already an extremely expensive stock before Wolfpack Research hit the stock with a report suggesting the revenue targets are aggressive and investors should dump the stock.

Read the full article on Seeking Alpha. 

Update - April 27

Not a good look when the CEOs family is in a lawsuit over control. 

  • Skillz (NYSE:SKLZ) is involved in a legal tussle after the brother of the company's founder filed a petition to gain control back of an investment trust.
  • The lawsuit accuses Skillz CEO Andrew Paradise of a scheme to take over his brother's 5% stake of the company, per Bloomberg Law.

The stock can definitely continue rallying if ARK buys more shares. Just don't chase here because Skillz is far overvalued here. 

Finviz Chart

Update - April 23

Apparently ARK is the reason that Skillz rallied hard this week. Not a good reason to be a long-term holder at these prices as Cathie Wood has been known to far over pay for a stock.  

  • Skillz (NYSE:SKLZ) jets higher in early trading after ARK Invest snaps another 1,222,007 shares for the ARK Innovation ETF.
  • The fund bought over 4M shares earlier in the week.
  • On Wall Street, Jefferies starts off coverage on Skillz with a Hold rating and price target of $17.

My previous view was much more bullish on the stock at the recent lows, but the stock only got to a low of $12.40. Skillz definitely isn't appealing here at $17 where even Jefferies placed a Hold on the stock. 

Finviz Chart

Update - April 19

Skillz continues to collapse. The stock was far too expensive as investors bought too much into the gambling hype. 

Below $14, Skillz gets interesting, though the stock still trades at over 10x '22 revenue targets of $563 million. My view is that the stock becomes a buy around $10. 

Finviz Chart

Update - March 19

Skillz sells 32 million shares priced at $24. The company sold 17 million shares to raise $408 million while selling stockholders cashed out 15 million shares. The selling shareholders granted underwriters the option to purchase and additional 4.8 million shares for gross proceeds of $475 million.

For a stock that just went public, shareholders sure want out of the stock. Another massive red flag that Skillz is extremely over valued. 

Disclosure: No position mention. Please review the disclaimer page for more details. 

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