BTIG Downgrades Skillz inc. (SKLZ) to Sell

BTIG analyst Clark Lampen downgraded Skillz inc. (NYSE: SKLZ) from Neutral to Sell with a price target of $0.65.

The analyst commented, "We’re reducing estimates for Skillz and lowering our rating from Neutral to Sell with a $0.65 PT, as recent checks suggest the challenges associated with a business model pivot toward sustainable, profitable growth are greater than we initially appreciated. Additionally, we are seeing signs of weakness in revenue-related metrics like traffic and downloads that suggest higher risk of negative near-term revisions. Highlights: 1) We’ve been skeptical of Skillz’ transition to profitable growth, given the host of product/platform initiatives, M&A, and other endeavors that haven’t paid off, or have seemingly been abandoned. As a result, we think the key issue/driver for Skillz remains an imbalance between CAC and player revenue/LTVs; 2) Developer checks substantiated that concern, while also shedding light on other issues — major studio partners are still operating unprofitably, IDFA has magnified CAC/LTV issues, and small studios rapidly cloning successful games seems to be penalizing Skillz for being a first-mover; 3) Our call on Skillz is mainly related to what seem like structural issues that reduce the odds of long-term viability, but we are also seeing some signs of degradation in traffic and downloads of late with key studio revenue also declining. That leaves us concerned that estimates may need to be reset again, and that the implied acceleration in ’23 consensus revenue is too aggressive. Where could we be wrong? If there’s a sequential inflection in unit revenue, Skillz improves its customer acquisition costs, diversifies its studio/game base, or successfully introduces new revenue streams, like advertising."

For an analyst ratings summary and ratings history on Skillz inc. click here. For more ratings news on Skillz inc. click here.

Shares of Skillz inc. closed at $0.94 yesterday.

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