Why Skillz Stock Dropped to a New All-Time Low Today

What happened

Mobile gaming platform actions Skill (SKLZ -8.51%) hit a new all-time low on Tuesday, dropping as low as $1.28 per share. The stock is now down 97% from its all-time high and ended today’s session down 8%.

So what

Skillz had no direct news today, but there was a relevant development that is believed to have come from a third-party research group. According to a report by NPD Group, total gaming revenue fell 19% year-over-year in May, its lowest point in two years. Additionally, the report states that mobile gaming revenue is also declining. On Alphabet‘s Google Play Store, there was a 23% drop. And AppleThe App Store recorded a decline of 2.6%.

It should be noted that the majority of Skillz distribution comes from Apple.

To sum up today’s problem, Skillz’s business was already in trouble. And now the gaming industry in general could back off, exacerbating the company’s uphill battle. Therefore, it is not surprising to see stocks falling to a new all-time low.

Now what

Skillz stock has fallen so much that it is now trading slightly below its book value per share of $1.35, according to Yahoo Finance. But a word of warning for potential value investors: its book value per share is likely to continue to fall through 2022. CEO Andrew Paradise reiterated in the first quarter of 2022 that the company is unlikely to reach the threshold. profitability on an adjusted profitability basis before 2024. In other words, the company burn money for at least two more years.

After posting a net loss of $148 million in the first quarter alone, Skillz will see its book value continue to decline. So don’t think of it as a stock of value. It is a company in a difficult financial situation and in need of a turnaround. And if May’s data from NPD Group signals the start of a longer trend, it could get even tougher for Skillz.

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