What happened
Shares of the mobile gaming platform company Skillz (SKLZ -0.95%) spiked this morning after the company reported in a filing that its CEO, Andrew Paradise, purchased 1.5 million shares of the company on Wednesday.
The stock is up by 14.7% as of 10:43 a.m. ET.
So what
The company reported in a Form 4 filing yesterday that Paradise purchased the stock for $0.56 per share, bringing the total transaction amount to about $836,300. Investors love to see executives purchase shares of their own company because it shows that they are committed to the business and believe in its growth potential.
And Skillz investors may be especially enthusiastic about Paradise's stock purchase considering that its share price has plummeted 79% over the past year. Growth stocks have faced increasing pressure as interest rates have risen quickly, making it more expensive to borrow money. Additionally, the surge in mobile gaming that occurred during the pandemic has tapered off, leaving Skillz and other entertainment gaming companies reeling.
Investors may also be pleased to see the Skillz CEO buy the company's shares following the company's fourth-quarter earnings report, released last week. Skillz's revenue of $46.9 million in the quarter -- down 57% year over year -- fell below analysts' consensus sales estimate of $48.7 million, and its loss of $0.34 per share was far worse than Wall Street's expectation of a loss of $0.12 per share.
Now what
While it's good to see that Skillz's management has faith in the company, investors may want to be cautious with this stock right now. The company still appears to have a lot of work ahead of it before it can bounce back from its current losses and revenue decline.
