7. Skillz Inc. (NYSE:SKLZ)
Share Price Performance Since July 2021 Start: -98.23%
Number of Hedge Fund Investors In Q1 2024: 8
Skillz Inc. (NYSE:SKLZ) is an entertainment services provider that enables users to host video game tournaments. It generated quite a bit of hype in 2020 after becoming the first eSports organizer to go public. However, soon after, Skillz Inc. (NYSE:SKLZ)’s stock faced trouble on the stock market as it tried to rely on a blossoming share price to raise more capital by issuing more stock. Such decisions generally do not bode well for young companies, and the stock tanked by 13% in March 2021 when the news hit the wires. This was followed by a 48% drop in December 2022 after the firm shared that it might be delisted from the NYSE. The stock fell another 19% in premarket trading in June 2023 when Skillz Inc. (NYSE:SKLZ) announced a reverse stock split. Investors viewed the decision as Skillz Inc. (NYSE:SKLZ)’s management attempting to prop up the stock without any underyling improvement in its fundamentals. The share price drops continued in 2024, after the firm’s first quarter earnings saw Skillz Inc. (NYSE:SKLZ) report a $26.7 loss that overshot analyst estimates of a $25.78 million loss.
Skillz Inc. (NYSE:SKLZ)’s Q1 2024 earnings call was quite an event as it saw management comment in detail about its legal attempts to combat fraud through bots. On the operational front, they were more sober and shared:
With that said, we have some near-term challenges in Q1, which masked some of the progress. We know that progress on our turnaround initiatives will take time, and it won’t always be linear every quarter, particularly in a period such as Q1, where we implemented several initiatives. That said, our ability to make further progress in improving retention, engagement, monetization, and increasing our audience was not optimized in Q1. This is evident in our paying users for the quarter, with Paying MAU declining to 121,000 in Q1 2024 from 137,000 in Q4 2023. While this rate of sequential decline is significantly less than the sequential rate of decline from Q3 2023 to Q4 2023, we expected to perform better than we did. In Q1, we saw issues with new customer on-boarding, and while we quickly took several actions, these actions did not fix the on-boarding issues enough to benefit our performance in Q1.
We continue to address new player on-boarding issues and believe that as of late April, we’ve implemented the necessary changes to improve on-boarding of new customers and get us back on track to execute our improvement initiatives. While our fixes to on-boarding issues are still in the early stages, the data we have so far indicates our audience decline has slowed. At this time, we do not believe the on-boarding issues and our execution in Q1 will stop skills from being adjusted, even though positive in Q1 will stop skills from being adjusted EBITDA positive in Q4 2024. At the same time, we continue to do a good job with expense management with Q1 2024 OpEx in line with Q4 2023, excluding Q4 one-time accrual reversals. Our adjusted EBITDA loss again improved on a year-over-year basis.
