We produced a livestream youtube video of the company and stock Skillz $SKLZ. Hope you enjoy it and find it insightful.
Towards the end of the video we document our key findings in 15 points:
Skillz: Top 10 list:
1. The stock losses over the past month appear to be from low-volume selling, and not really from trading. The day’s lows don’t recover. IMO: this is just selling. Could be just shorting too?
2. The company trades at 1/3 of the book value. $84M equity market capitalization vs. ~$250M book value.
3. CEO made a statement about Q2 2023 objectives, and we are on track to achieve them. There is evidence.
4. More new games. Bolero, NFL, and others. Not that many reviews per game. Could new games mean more revenue.
5. AARKI (consulting firm) is getting new investment and 20% shares in their performance plan. Should help rebuild that business, which is helping developers navigate the new Google Privacy Sandbox method.
6. This stock keeps falling, down from $250/share to $4/share since December 2021.
7. A lot of short interest, maybe up to 2M shares out of 17.0M shares not owned by the CEO.
8. In the past few days, there has been significant short selling (short volume > 50% for the past 10 days). 74% and 62% in the past 2 days (very short).
9. In Stocktwits, this symbol has extreme fear (bearish) and extremely high message volume (loud).
10. (New feature) Daily challenges in a game does boost engagement. We know this from Monster Hunter Now. SSO, Enhanced Chat and other features are needed too. Integrated with Unity Engine.
11. We just bought 1000 shares: 12:44:41 $3.9894 on the video. It did not move the stock price at all.
12. There seems to be only one institutional investor: Wildcat Capital Management, LLC with ~19.5M shares (although they recently sold ~2M). Also, CEO owns about 4M of the 21M shares (and 100% of the Class B with extra voting rights). ARK and BlackRock used to own it, but not any more. Some small ETFs own it.
13. SKILLZ has many job openings in Las Vegas. Many leadership roles in engineering, accounting, operations and product development. 32 in Vegas, 15 in SFO, and 4 technical roles in Seattle.
14. Good cash management: Prudent stewards of capital. Jason Roswig, President and CFO, added, “Our prudent management of the business resulted in a quarterly cash burn rate in Q2 of approximately $14.6 million with our June 30 cash position (including marketable securities) of approximately $361.4 million. As a result, we have the flexibility to invest in new product features for our platform that will drive increased scale in our business and attractive top-line and cash flow growth. At the same time, our solid balance sheet and capital structure provides us with significant optionality to deploy resources to enhance shareholder value. In this regard, during the second quarter, we opportunistically re-purchased $159.8 million in outstanding debt at a discount resulting in total debt as of June 30, 2023 of $129.7 million.”
15. User Acquisition Spend (marketing) is getting more effective. They are targeting a 6-month payback period, down from ~11 months today (Q2 earnings call).
We also made notable progress throughout the second quarter in continuing to improve user acquisition spend and are confident we are on track towards achieving our optimized goal of a six-month payback period.”
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