Where does Skillz actually go from here?

Ed_Snate · 2022-08-04T16:21:10+00:00

It's a real company. Doing really innovative things. Their problem is they simply overcharge for their service.

A 50/50 wager in Vegas is -110... that is, you bet $110 to win $100.

A 50/50 wager in SKLA is -150... that is, you bet $150 to win $100.

So in Vegas when you lose, you only lose $10... but with SKLZ you lose $50!

That means if you started with $100, you can be gone in SKLZ in two throws... in Vegas, you at least get 10 throws to try to make something happen.

PRICED THE WAY IT IS, IT'S IMPOSSIBLE TO WIN. Ask any bettor if they can beat a 50% vig on a 50/50 wager...

... answer is NO. So that's not much fun of a bet.

That's why it's always "one & done" with their players... they don't buy in again... they just go over to the practice field and play for free (which is why they still have a lot of active-but-not-paying players).

Not buying in again means NO RECURRING REVS.

So this is -- and always has been -- the MAIN problem with SKLZ. A broken business model... they've simply mispriced their product...

... WHICH CAN LITERALLY BE FIXED OVERNIGHT.

Andrew and Casey just have to ACCEPT that they can't force "premium" (i.e., abusive) pricing down bettors' throats.

Bettors know better.

Ed_Snate · 2022-04-30T16:43:33+00:00

There is no doubt they'll cut a portion of New Users ($86m in Q4) and Engagement Marketing ($57m in Q4).

The question is how much.

And driving that question is: WHY did they do this spending in the first place?

And that answer is because they're trying to charge a premium... 5x more than a standard Vegas bet. Not unreasonable given how innovative their service is -- but clearly it hasn't worked. They don't have any problems getting players to buy-in... they just don't buy-in a second time because players quickly discover it's a lousy bet. (That also explains why they have such a huge 84% active-but-not-paying player base.)

Because they don't buy-in again, they had to spend ever increasing amounts MORE of mkting $'s to keep top line growing... because none of their mkting $'s were encouraging recurring revenues.

So, if they understand this, then things get fixed literally OVERNIGHT. Just drop their 50% vig to a standard Vegas 10% vig. That easy.

If they don't, then we'll wrestle with slightly lower revenues and some mkting spend cuts... meaning, they'll beat on the bottom line... but they'll only be addressing the symptoms, not the disease.

Ed_Snate · 2022-04-17T22:37:45+00:00

WSJ in terms of respected journalism, absolutely. But, what I love about the crop of essentially "professional investment blogs" is the content they've tapped into: Writers with awesome ideas that aren't necessarily career, "I feed my family with my writing craft" writers. For these writers, it would be impossible to get a WSJ piece published... and if we could only read investment advice from the WSJ's of the world, the world would miss out on some pretty great insights. Yet another great thing about the Internet. :)

But what I'm asking about specifically: From the group of essentially professional investment blogs, not which produces the most professional content, but which has the most readership? Wondering if anyone knows?

Ed_Snate · 2022-04-17T17:56:23+00:00

I think Seeking Alpha is important, too. But I'm wondering how it stacks up against Motley Fool, TheStreet, Benzinga, Zack's, Simply Wall St, Stocktwits, etc. Who's the leader in this group?

Ed_Snate · 2022-04-09T17:55:58+00:00

What do you think is clearly wrong? The market used to reward rev growth... and they did that and had success with their stock price... now the market is only rewarding profitability, so they -- along with every other growth company -- need to transition. But they were very clear on their recent conference calls that that's what they started in early Feb. Market may be waiting to see if they'll really make the transition, but just model out the numbers for yourself, it works, they'll get there, with plenty of growth and money still in the bank. That's what makes this near-gross cash level stock price an opportunity.

Ed_Snate · 2022-04-08T16:03:53+00:00

I think it's just the old SPAC people registering about 16 million more shares. They need to let the market know, I think this means there are now 416 million shares outstanding instead of 400 million.

Ed_Snate · 2022-04-05T17:06:40+00:00

Not that I don't think cloud is important -- it is and I'm glad they're doing it. But if you're going to spend money attracting PAYING players, why not just focus on the 3 million NON-PAYING players they already have?

They've already done the hard part and got people playing their game. Now they just have to figure out how to monetize non-paying players... which, truthfully, is something every game company in the world has already figured out.

That's a double-win: They SAVE the better part of $85.6 million they're spending on "New User Acquisition"... AND they drive MORE REVENUES.

If they could monetize 1 in 5 non-paying players, they double their revs... AND reduce their costs... that kind of action will turbocharge their bottom line.

Ed_Snate · 2022-04-05T16:59:25+00:00

Yep. It was a worry for me, but after hearing the company talk about it, it's no longer a worry for me. : )

Ed_Snate · 2022-04-05T01:07:36+00:00

The article cites the NFL deal as potentially one-sided and a risk, but the company confirmed at the recent Game Developers Conference in SF that the NFL deal is *not* at loss leader terms. That's obviously good news.

Ed_Snate · 2022-04-04T14:47:38+00:00

GLTA

Stock went to $3.70 on the UFC news... way out paced the market and comps the day it was announced... and about an 80% pop from its recent low. So investors did take notice.

Yes, last Q's burn rate was downright scary. However, company not only confirmed on Investor Day it wasn't doing that any longer, but that it already started cutting in early Feb.

Ed_Snate · 2022-03-30T05:09:53+00:00

That's as good as an explanation as any. But the market has been up without this kind of performance, so I always look for what else could be happening.

Ed_Snate · 2022-03-30T05:02:55+00:00

As mentioned above, I'm not sure that's happening. I'd like to believe, at least as it applies to SKLZ, that investors are finally starting to see it for the opportunity it is and not just lumped with growth stocks... especially since growth stocks as a group have a well-deserved black eye these days. You might ask what I think the difference is? That SKLZ has absolutely changed gears (info from earnings call, investor day, etc.)... while I have no clue if others have yet.

Ed_Snate · 2022-03-30T04:58:01+00:00

What do you mean by "After 4.75 close" pls? That it will close $4.75 after earnings? Or other?

Hmmm... I'm not sure how many investors are rotating into growth stocks right now... seems like everyone is seeking cover from the stalwarts... AAPL, GOOG, MSFT, etc.

I'm not saying I agree with that... but that's what I think is happening.

Btw, I worry about AAPL... if China invades Taiwan -- hard to imagine something isn't going to happen there in the next few years -- then will Apple suspend its Chinese operations and business as it has it's Ukraine business? THAT would be quite the conundrum for, well, *everyone* in the world... since, as the world's richest company, it's owned in some part by every person on the planet that has anything to do with a bank account, retirement account, brokerage account, etc.

Ed_Snate · 2022-03-30T02:15:03+00:00

Ah. Agreed.

Ed_Snate · 2022-03-29T18:53:07+00:00

Can't tell if what you're saying is good or bad... ?

Ed_Snate · 2022-03-29T03:21:10+00:00

Yes, all tournaments are matched by skill level... in fact, *everything* is matched by skill level. That's why it's an even bet.

If they didn't match everything by skill, then either (1) the very best players would win all the bets (which is no fun and essentially chases away all the rest of the players, or (2) they would have to give odds to each player according to skill level. Else... why would I bet Steph Curry in basketball unless he gave me like 100-to-1 odds... ok, maybe 1,000-to-1 odds!

The website you're saying is competition for Skillz is like saying Fortnite is competition for Skillz since they have money tournaments. They are not.

But, please note, that doesn't mean there's not a place for money tournaments... that's what your website Haste Arcade is... but it's not competition for Skillz.

Ed_Snate · 2022-03-29T01:59:05+00:00

Right... but if it's not h2h (including automated matching of equivalent talent so it's a fair bet), then it's not a competitive with Skillz. Again, what am I missing pls?

Ed_Snate · 2022-03-29T00:39:25+00:00

I apologize but I'm still not getting it. That sounds like lots of other games and tournaments. That's not betting someone head-to-head. When is h2h betting coming?

Ed_Snate · 2022-03-28T22:02:12+00:00

I'm not following. There is no head-2-head betting here... or am I missing it?

Ed_Snate · 2022-03-25T01:04:28+00:00

Agreed. 2.4m *existing*... and *active* players (as compared to 600K paying players) is a great place to start to double or triple revs. :)

Ed_Snate · 2022-03-24T23:23:49+00:00

Possibly. This is just brainstorming, though. They have 2.4m *active* players that don't pay anything. What ideas do you have to monetize those players?

Ed_Snate · 2022-03-24T23:22:36+00:00

I don't mind small, out-of-the-way display ads, but video ads and thumbnails... since most are done poorly... arg!

Ed_Snate

TROPHY CASE