PreMarket Prep Stock Of The Day: Skillz

When a stock is attempting to rebound after an extended decline, besides improvement in the technicals, it needs a catalyst(s) to help move it along. That scenario applies to Skillz Inc. SKLZ, which is the PreMarket Prep Stock of the Day.

The Company: Skillz is the leading mobile games platform that connects players in fair, fun and meaningful competition. The Skillz platform helps developers build multimillion-dollar franchises by enabling social competition in their games. Leveraging its patented technology, Skillz hosts billions of casual esports tournaments for millions of mobile players worldwide and distributes millions in prizes each month.

Volatile In 2021: After ending 2020 at $20, Skillz stock more than doubled when it peaked in February at $46.20 in February, during the height of SPAC mania.

In a case of too much, too fast, the issue went into an extended decline. It has been lower in six of the last seven months and is flat so far for October.

The issue made an all-time low Oct. 11 at $7.97 and posted its all-time closing low on that day as well at $8.05.

Winning Streak: Since making that low, it has been higher in six of the last seven trading sessions, with the one outlier being a retreat of 37 cents Oct. 15 ($9.10 to $8.73), On Wednesday, the issue posted its highest close for the rebound at $9.19.

The Catalyst: Before Thursday's open, the company announced the appointment of Vatsal Bhardwaj as the company’s chief product officer. An experienced gaming executive who most recently served as the general manager and director of game tech for Amazon Web Services (AWS), Bhardwaj joins the Skillz C-suite, further strengthening the company’s executive team with seasoned leaders from many of the world’s most prominent brands.

Price Action: The news of the hire of the Amazon executive instigated a higher open ($9.38 vs. $9.19). The stock only dipped to $9.32 before continuing its move higher. It easily breached Wednesday’s high ($9.55) rallying to $10.21 and reversed course.

That marked the highest level for the issue since it peaked Sept. 29 at $10.67. The stock was up 9.68% Thursday afternoon at $10.08. 

Moving Forward: While investors have so far reacted positively to the hire, only time will tell if he is able to turn the company into a profitable one. In all three of its earning reports since becoming a publicly traded company, it has posted three EPS losses ranging from 13 to 21 cents. The company will report third-quarter earnings after the close Nov. 3. 

On a positive note, the company has increased its revenues in every quarter, moving up from $67.72 million to $89.49 million in the second quarter. 

On a technical note, closing above the psychological resistance level of $10 may attract some momentum investors into the issue.

Benzinga's PreMarket Prep airs every morning from 8-9 a.m. ET. During that fast-paced, highly informative hour, traders and investors tune in to get the major news of the day, the catalysts behind those moves and the corresponding price action for the upcoming session.

On any given day, the show will cover at least 20 stocks determined by co-hosts Joel Elconin and Dennis Dick along with producer Spencer Israel.