- Skillz Q1 results showed a platform surging in new revenue but not new users.
- Critics and fans argued extensively over the importance of various metrics.
- SKLZ shares remain lower in Wednesday’s premarket.
Once a SPAC darling just five months ago, Skillz (NYSE: SKLZ), operator of a video game betting platform, both delighted some investors and gave many detractors ample room for criticism.The company released its first earnings report since going public, after the market closed on Tuesday, May 4.
Skillz reported a loss of 15 cents a share, a penny off estimates, on revenue of $83.7 million – $3 million better than estimates and up 92% YoY.
Instead of applauding the platform’s impressive near doubling of revenue, critics honed in on the fact that monthly active users (MAUs) only rose by about 3.8%, or 100,000, over the same time period.
Supporters, on the other hand, focused their positivity on paying monthly active users, who grew by 81%. Additionally, Skillz wowed some by increasing average monthly user revenue to $10.35 from $5.57.
In the premarket on Wednesday, shares of SKLZ were down 1.2% at the time of writing at $16.76. This is a 64% correction from the shares’ high in early February when hype catapulted SKLZ briefly to $46.30
Since February 5, the stock has been trading within a descending channel. Although it briefly jumped above the 200-day moving average on April 22, it once again fell below the bellwether moving average just a week later and appears likely to produce a lower low.
If shares do push lower, one would expect them to retest the low last month of $12.40. If they fall below that level, then the next support sits all the way down at $11, a swing low from last November.
Though hopes of a reversal seem unlikely for now, Skillz’ price would need to climb past the April 26 close of $21.16 to confirm a reversal is in the cards.
SKLZ 1-day chart
One possibility for a reversal is that Cathie Wood’s ARK Invest continues buying. Famous for her Tesla call and early championing of other growth stocks, ARK purchased more than 6 million shares in late April in a signal she is not giving up hope.
Jefferies recently placed a hold call on the stock at a $17 price target, and Stifel Nicolaus and Wedbush reiterated buy ratings at $28 and $34, respectively.
