Until earnings come out, nobody is safe. Even afterward, companies that do not exceed expectations can face a slew of bad press and lower ratings from analysts. This is too true for Skillz Inc. (SKLZ), which recently reported its Q3 results to little fanfare. Going into Q4, the integrated mobile video-gaming competition company is expected to shift its marketing focus and increase operating expenses. (See Top Smart Score Stocks on TipRanks)
Brian Fitzgerald of Wells Fargo reported on the bearish outcome, writing that “the ‘tipping point’ where network affects drive the flywheels between players, developers, and advertisers is still a ways off.” At least in the near-term, he does not expect the necessary synergies to fully materialize for Skillz and its ecosystem.
Fitzgerald rated the stock a Hold and delineated a price target of $15.
The five-star analyst added that the company will shift its marketing strategy to zero in on acquiring new users. This is in contrast to its previous focus of driving the engagement and retention levels of its existing base.
Looking forward, the next few months do not carry the brightest of futures. Q4 is typically a slow period wherein “digital advertising prices take up as consumer/e-commerce companies lean into holiday marketing.” Due in part to this trend and the current valuation of the company, Fitzgerald declined to offer any bull case at the moment.
This sentiment will persist for Fitzgerald until the company begins to ramp up and capitalize on its monetization opportunities within its field.
On TipRanks, SKLZ has an analyst rating consensus of Moderate Buy, based on 3 Buy and 3 Hold ratings. The average Skillz price target is $18.40. By 11:48am EST Thursday, SKLZ was down -8.69% to a price of $11.38 per share.
Disclosure: At the time of publication, Brock Ladenheim did not have a position in any of the securities mentioned in this article.
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