What happened
Shares of mobile-gaming platform Skillz (SKLZ -1.63%) hit a new all-time low on Tuesday, sinking as far as $1.28 per share. The stock is now down 97% from its all-time high and finished today's session down 8%.
So what
Skillz didn't have direct news today, but there was a relevant development that reportedly came from a third-party research group. According to a report from NPD Group, total gaming revenue fell 19% year over year in May, its lowest point in two years. Moreover, the report said that revenue for mobile gaming was also down. On Alphabet's Google Play store, there was a 23% drop. And Apple's App Store saw a 2.6% decline.
It should be noted that the majority of Skillz's distribution comes from Apple.
To summarize today's problem, Skillz's business was already struggling. And now the gaming industry in general could be pulling back, exacerbating the company's uphill battle. Therefore, it's not surprising to see shares fall to a new all-time low.
Now what
Skillz stock has fallen so much that it now trades slightly below its book value per share of $1.35, according to Yahoo Finance. But a word of warning to potential value investors: Its book value per share will likely continue to fall throughout 2022. CEO Andrew Paradise reiterated in the first quarter of 2022 that the business likely won't break even on an adjusted profitability basis until 2024. Put another way, the business will burn cash for at least two more years.
After registering a net loss of $148 million in the first quarter alone, Skillz will see its book value keep falling. So don't think of this as a value stock. It's a company in a difficult financial position and in need of a turnaround. And if NPD Group's May data signals the start of a longer trend, it could get even harder for Skillz.
