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Skillz - AI Stock Analysis

Analysis generated February 9, 2024

Skillz Inc. is a mobile gaming platform that connects players in fair, fun, and meaningful competition. As the first publicly-traded mobile eSports platform, Skillz has a unique position in the industry, offering a software layer that facilitates gaming competitions and monetizes via entry fees and advertising. Skillz leverages its patented technology to host billions of casual eSports tournaments for millions of mobile players worldwide, and its popularity has made it a significant figure in the burgeoning eSports market.

Fundamental Analysis

Looking at the recent financial numbers, the revenue trend for Skillz is a red flag, with a decrease of 36.36% from the previous quarter, and a more alarming year-over-year decrease of 39.51%. Such declines point to potential operational issues or an increasingly competitive market that is challenging Skillz's growth trajectory. Furthermore, a net income decrease of 100.75% from previous quarter suggests stark profitability challenges, though the year-over-year increase of 59.69% shows some resilience.

On a more positive note, an EBITDA of $31 million for the last quarter, up 11.41% from the preceding quarter and up 58.17% year over year, signals a possibly brighter side to the operational efficiency or cost management practices of the company. It indicates a level of operational control that could pave the way for future profitability if revenue declines are addressed.

Technical Analysis

From a technical standpoint, Skillz stock price is currently at $6.52, with a 15.81% growth over the past month, presenting a short-term bullish trend. However, the 56.68% drop from the same time a year ago is concerning from a long-term investment perspective. The increase in simple moving average (SMA10) from 5.69 to 5.81 supports the bullish short-term sentiment, yet a relatively low RSI of 34 hovers in the neutral zone, neither overbought nor oversold, suggesting a lack of strong market momentum in either direction.

Alternative Data Analysis

The reduction in job postings by 32% can signal either a cautious approach to operating expenses or a troubling sign of stagnancy for a tech company that ought to be in growth mode. The positive trend in business outlook, up by 15%, however, juxtaposes this and could imply internal confidence or strategic shifts.

The 5% decline in web traffic is a concern for customer acquisition and retention. Coupled with static app downloads and social media following, these indicators suggest a lapse in user engagement and potentially, a plateauing of the user base, which could have direct implications on future revenue and market position.

Conclusion of Analysis and Recommendation

The fundamental and alternative data present a mixed picture for Skillz Inc., highlighting the need for a careful analysis of the company's strategy moving forward. Despite the short-term positive technical signals, the fundamental and alternative indicators raise enough concerns to warrant a cautious approach for long-term investors.

Investors should also consider the company's potential to pivot and capture new growth opportunities within the mobile gaming and eSports markets. As such, due to the risks of declining revenues and market presence, but also considering the recent positive EBITDA growth, it is my recommendation to hold on Skillz stock and monitor the company's performance closely in the upcoming quarters, particularly focusing on revenue growth and customer acquisition strategies.