Skillz: User Growth Problems

 

  • Skillz fell after disappointing Q2 user totals and mounting costs.
  • The skill-based gaming company continues to spend far too much on marketing expenses.
  • The stock remains expensive at 10x '22 sales for a money-loser unable to grow users despite aggressive spending on marketing.
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Once promising Skillz (SKLZ) has again shown investors the problems with buying into too much hype. The skill-based gaming company has impressive revenue growth, but the lack of cost containment questions the LTV of gamers on the platform. My investment thesis remains Bearish on the stock despite the dip to the lows around $13.

Read the full article on Seeking Alpha. 

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

Update - August 6

Skillz closing below $12 sets up more weakness next week. A company can't keep outspending revenue forever without repercussions. 

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