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Is This an Overreaction to Skillz's Earnings?

By Jose Najarro – Nov 5, 2021 at 10:30AM

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Skillz's stock dropped over 8% after the company reported earnings.

Today's video focuses on Skillz (SKLZ 0.71%) and why its stock price dropped after it reported earnings on Nov. 3, after the market closed. Here are some highlights from the video. 

  1. Skillz reported revenue of $102 million, up 70% year over year (YOY) and 14.6% quarter over quarter (QOQ). Paying monthly active users also grew to 0.509 million, up 47% YOY and 10% QOQ. New games like Big Buck Hunter helped Skillz increase its growth. 
  2. Skillz depends on advertisements to acquire users and keep them engaged. Roughly 110% of revenue is used in sales and marketing expenses. 49% is engagement marketing, usually as bonuses given to paying users when they deposit money in the platform. Skillz does have roughly $540 million in cash and short-term investments.
  3. Skillz has made numerous investments to reduce advertisement costs and improve its technology in the past few months. It recently acquired Aarki Platform, an advertisement platform that can help reduce its cost per install (CPI), a metric used to determine user acquisition costs. 

Click the video below for my full thoughts and analysis. 

*Stock prices used were the premarket prices of Nov. 4, 2021. The video was published on Nov. 4, 2021.

Jose Najarro owns shares of Skillz Inc. The Motley Fool owns shares of and recommends Skillz Inc. The Motley Fool has a disclosure policy. Jose is an affiliate of The Motley Fool and may be compensated for promoting its services. If you choose to subscribe through his link, he will earn some extra money that supports his channel. His opinions remain his own and are unaffected by The Motley Fool.

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