Overview
Skillz Inc. made its mark this week following a deal with a special-purpose acquisition company that allowed it to go public. If you don’t know anything about this company, let me shed some light. Skillz allows 2.7 million players per month to compete with others on their mobile phones for points or rewards in games such as Solitaire Cube or Blackout Bingo. Approximately 1,700 tournaments are run per second. So the key words there are phones and games. Phone in this day and age is a necessity. From kids to the older generation, everyone seems to have a phone, and when you couple that with games that allow you to compete, that is just a recipe for success, especially during COVID. I am not a gamer, but because I have been staying at home for the longest time, I have been looking for a gaming laptop to start my gaming career.
The JUICE
So what’s the big deal about this company?
1) The business model disrupts the traditional mobile gaming space. Small-to-midsize game developers make money without having to sell to big companies with Skillz. Consumers must pay tournament feeds, and Skillz receives about 14% of the cut.
2) Skillz hosts 2 billion tournaments annually, and users spend more minutes per day on Skillz’s platform than users of TikTok.
3) Skillz Games allows users to make money in a few different ways. Through playing games and winning tournaments, players can earn money and withdraw it at any time. Aside from real money, the games also utilize a virtual currency that can be used within games.
4) Skillz is legal in 37 out of 46 states
5) Skillz is the first publicly traded mobile esports platform
Technical Valuation
Skillz went public through flying Eagle Acquisition Corp. Other investors included Wellington Management, Fidelity Management & Research, Franklin Templeton, and Neuberger Berman. The company is currently trading at $22-$23, opening around $18.So a bit of value has been gained by IPO investors. Given how hot E-sports and mobile gaming are likely to remain in the next decade, there’s a good reason to expect the stock to rise over time. A hypothesis that connects mobile phone sales, 5g infrastructure, the rise of the e-sports industry, more game developers and gamers online may bring this stock to a bullish position. Furthermore,
ARK Next Generation Internet ETF purchased more than 215,000 shares of Skillz. I anticipate more involvement from big players as they see the growth in this space.
Skillz’s platform is currently home to just 2.7 billion mobile gamers and 10 million developers worldwide. The company believes that the market will double in value to $150 billion by 2025. However, this is just an estimate, and I think that we should be conservative and prudent.
As usual, I am not a financial advisor, and this is not advisable for you to start dwelling on stock trading. The thought process above is solely to validate my understanding before purchasing any equity. I am still learning the process of evaluating and identifying opportunities in the stock market. By doing this, I am creating a structure for my brain to follow and not be an impulsive buyer or act emotionally when the market is against me. It is a journey I thought of worth sharing with any interested audience.
Happy New Year! Stay at home and play games! Help flatten the spread.