In this video I will talk about Skillz (SKLZ -4.70%) and whether it is worth the hype. The stock is down 60% since its highs back in February. Skillz is a multiplayer tournament platform that lets you compete in mobile games with other people around the world for either real cash or virtual currency.

It has quite a lot of competition from other casino-type games (it offers other types of games as well). Right now I think it's focusing on quantity, not quality.

Growing fast

The company reported great first-quarter earnings. Revenue grew to $83.7 million, up 92% year over year. Gross profit grew to $79.4 million, up 95% YOY. Gross margin was 95%, 100 basis points higher than the prior year. It has $613 million in cash and no debt, but all that growth does come at a cost. The net loss was $53.6 million, compared with $15.5 million in the prior year.

But there's more good news: Average revenue per user is at $10.35 compared to $5.57 in the prior year, and paying monthly active users almost doubled as well, from 258 thousand to 467 thousand. The company also said that 100% of paying MAUs are depositors with no bonus cash.

NFL partnership

On Wednesday, April 28, Skillz officially launched the Game Developers Challenge in partnership with the NFL. The collaboration was originally announced back in February, but now game developers are free to start submitting their best ideas for NFL-inspired mobile games. While this is a great marketing move for Skillz, we don't know whether a big studio has participated in the contest.

Aarki acquisition

On June 2, Skillz announced it will acquire Aarki to form the first integrated esports advertising platform. Skillz will acquire 100% of Aarki for approximately $150 million in cash and stock. The transaction is subject to customary closing conditions and is expected to close in the third quarter of 2021. The main purpose of the acquisition is to help developers acquire more users more efficiently and get more exposure.

For the full insights do watch the video below. 

*Stock prices used were the closing prices of June 1st, 2021. The video was published on June 1st, 2021.