Mobile games platform Skillz Inc SKLZ shares tanked Monday after Wolfpack Research classified the latter’s top games as “stagnant to declining.”
What Happened: The short seller said on Twitter that Skillz’s top three games — which make up for 88% of its revenues — had already peaked by the third quarter of 2020 and its growth story is falling apart in the first quarter of this year.
Wolfpack wrote that while Skillz is projecting a 12.3% sequential growth and 61.4% year-over-year revenue growth in Q1 21, third-party app data indicates that the company’s total installations have declined by double digits in the first two months of the period.
“[Skillz] appears to be another SPAC preying on retail investors by assigning a ridiculous valuation for the SPAC merger based on self-serving projections.”
Skillz shares tanked 10.93% to $24.45 on Monday and fell 0.82% in after-hours trading.
See also: How to Invest in SPACs How to Invest in SPACs
Why It Matters: Skillz went public in a merger with Flying Eagle Acquisition Corp in December last year. At the time of the announcement of the merger, Skillz was valued at $3.5 billion, 6.3 times its estimated 2022 revenue of $555 million.
In January Skillz spiked 21% after Cathie Wood added the stock to her Ark Next Generation Internet ETF ARKW.
In February, Skillz announced a partnership with the National Football League to host a global game development competition.
Wolfpack came down heavily on the announcement saying the company has a “history of announcing deals/partnerships which have historically amounted to very little, or nothing at all.”
On the NFL tie-up, the short seller said that the news led to a 25% spike in Skillz shares to all-time highs “just days before filing an S-1 allowing insiders to sell millions of shares of stock at these inflated prices.”
Photo courtesy: Skillz Inc.
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