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another SKLZ shitpost, except with actual DD this time

by now you’ve seen the 18% jump from today, and you’re wondering, is it too late? did I miss the SKLZ boat? well as of now, no, you ain’t missed it. we’ve barely tasted the first real morsel of an amazing play. Anything below $15 is still probably good.

**first, wtf is SKLZ?** By now we don’t have the luxury to throw thousands of your mom’s cash at deep OTM calls on any insane combination of “e” and “cummerce.” Aunt cathy has been proven not always right, and we’ve all had our assholes expanded by the 2021 markets. So some actual DD to see if this is a good company is required.

SKLZ is a competitive e-gaming infrastructure provider. Meaning it has built and maintains the back-end for arranging tournaments, cash prizes, logistics, all that jazz for when you want to see if you can beat some other internet stranger at Blackout Bingo. Or literally any other of the 150+ games released or in active development on the SKLZ platform, including Big Buck Hunter (now up to #5 on App Store Sports Games chart), or the upcoming NFL branded games (yes, a legit partnership). You put in a little money to compete, and you can win actual cash for beating other strangers.

It’s as addictive as it sounds, and there’s a lot of regulation and legal stuff around it, which SKLZ also takes care of completely. They have algorithms that determine if a game is skill-based or chance, and they have sexy lawyers that take state policy makers out to drinks and let them think they’re gonna get their willy’s wet.

What this means is 2 things:

*(1) SKLZ is a legit strong business in a hugely growing, addictive area of revenue driving mobile gaming,* and

*(2) the majority of boomer investors, firms, and analysts don’t understand this company at all. They bot deep OTM calls that died along with all other spacs. Just imagine jim cramer trying to understand anything this company does. Now you see our advantage.*

**So here’s the good stuff:**

* From Q2 2020 to Q2 2021, the most brutal comp known to man, SKLZ did amazing in still growing revenue despite re-opening. 2019 Rev was $120M, 2020 Revenue was $230M, and 2021 Rev projected to be $389MM, based off the recent Q2 Earnings call. That’s a large double-digit growth %.

* SKLZ has no debt, around $700M in cash, and the CEO said they had runway for 7(!!!) more years, meaning lots of room to acquire new customers, grow product portfolio, acquire new companies, etc. etc.

* CEO Andrew Paradise has a great name, eats tacos when his stock goes up 20% (like tonight), oh, and also successfully built and sold an e-commerce company previously to Intuit

* Lockup terms with blank check “Flyin Eaglet” (altered to pass filter ban) includes a 24-month lock-out, so no DASH put action until December 2022, and btw major partners include Harry Sloan (Former MGM CEO) and Jeff Sagansky (Former CBS CEO)

* While there’s a SHIT-TON of SKLZ-backed games in development, the new games are NOT INCLUDED in future earnings guidance… so if Big Buck Hunter, or new NFL game, or one of the other 150+ new and upcoming games is a hit, we’ll be swimming in tendies like a hound in a chicken coop

* Lots of institutional ownership from Morgan Stanley, ARK Invest, and some others funds with names like “Wildcat” and “Atlas” that i guess probably sounded cool in 1978

* Bears r gey and some idiot short seller produced a report a few months ago saying the SKLZ was lying when they had a presser that highlighted the new NFL partnership. spoiler alert, SKLZ wasn’t lying, and the short seller is fuct.

* Related to above, short interest somewhere between 20-40%, depending where you look and how current the data is, which isn’t big squeeze potential, but means the float is lower and the stock can move pretty fast

* All the SPAC warrants expired 2 weeks ago, and liability is off the books

**The ugly?**

* People who don’t like growth stock valuations think that $10/share is still overvalued based on EV/rev, etc., and that it’s not making a profit yet. SKLZ could be making a profit NOW, but they’re choosing to invest and grow. That’s the whole idea.

* SKLZ is spending a lot on new customer acquisition costs, but I think this is temporary. As new games come on board, and game studios do their own marketing for the titles (remember, SKLZ is the competitive backbone, and not the developer) I think this should go down

* Currently 3 games from 2 studios account for 79% of revenue, which is bad. But again, 150+ new games being developed and released all the time, and those new games revenues are NOT INCLUDED in future earnings guidance. Take a look at the new games and find them on the App store, and evaluate for yourself whether this is an ongoing risk or not.

I didn’t take SKLZ seriously for a while for aforementioned reasons, probably related to Cathy’s god-fearing titties, but after getting deep deep into this company, I see huge potential. Yes, there are companies who will want to buy SKLZ. Yes, there are many, many games in development. And yes, this is company that is growing *extremely* fast.

I called AMC at $3 and some other shit, and I don’t really care if you listen, but I think this is a really freakin strong play and I’m getting too old to not have a sauna in my house. I need to make cash money.

**I’m long 1200 shares since early August with 11.68 cost basis.** If I hadn’t lost so much money already on deep OTM calls between February and June, I’d be putting a lot more on the table. Trust me. Lil Jack agrees, in fact I might have given him the idea. Check my comment history.

*God speed, retards.*

edit: goddamn thanks for the gold, that’s a first for me.

What do you think?

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31 Comments

  1. In Q2 2021, SKLZ spent over $90 million on Sales & Marketing only to LOSE users.

    This potentially indicates that these costs are required to maintain their userbase.

    Long term viability of “Customer Acquisition costs” is coming very much into question, and this stock could go to the $4-10 range if this trend continues…

  2. The cost of advertising games is at a minimum $3 cpm (1000 views). Average conversion rate is 1-2%. It take millions of advertising dollars to *try* to make a single game popular. This is an idea at this point until they have 20-40 revenue profitable games that have a growth trajectory. Until then it remains theoretical and likely another sir jack pump and dump

Daily General Discussion – September 4, 2021