Today another SPAC merger closed and a new company hit the public markets. This time, investors can welcome Skillz (NYSE:SKLZ), the first public esports business. So what do you need to know about the Skillz SPAC merger? And what makes SKLZ stock stand out here?
To start, up until today, Skillz was trading as Flying Eagle Acquisition. Now that the shareholders have approved the merger, Skillz gained some wings of its own and hit the New York Stock Exchange. This morning marks its first trading activity on the exchange, and the first chance for investors to gobble up SKLZ stock.
With that in mind, here are 12 things to know about the Skillz SPAC merger and SKLZ stock:
- Skillz began trading on the NYSE today under the ticker SKLZ.
- The SPAC transaction included $849 million in funding from investors like Wellington and Fidelity.
- Now that it is trading, Skillz has $250 million in cash.
- Additionally, investors will appreciate that it has no debt on its balance sheet.
- Importantly, Skillz is now the first publicly traded mobile esports platform.
- This public debut sets a record and also comes at a time when esports are increasingly popular.
- Company executives think the Skillz SPAC merger is the perfect way to leverage the growth runway in the industry and to expand internationally.
- With this in mind, Skillz estimates that there are 2.7 billion gamers in the entire world.
- Those 2.7 billion gamers are in a market that will be worth $150 billion by 2025.
- Right now, the international market makes up less than 10% of company revenue.
- However, Skillz said it has plans to really lean into international expansion.
- It believes its own revenue will grow from $225 million in 2020 to $555 million in 2022.
Why SKLZ Stock and the Skillz SPAC Merger Matter
Admittedly, Skillz is not looking so hot on its first day in the public markets. In fact, shares are down more than 1%.
However, investors who were bullish on SKLZ stock prior to the Skillz SPAC merger believe in the long-term potential in the esports space. And importantly, that potential seems to only have accelerated as a result of the novel coronavirus. Just think about it. We know that so many more consumers have been stuck at home with little to do. These consumers have turned to gaming, and particularly esports, as a way to pass the time and escape Covid-19 reality. Additionally, with the loss of live sporting events, many new viewers turned in to esports events.
This is the backdrop that Skillz thinks it can benefit from as it comes public. In fact, one of its pre-SPAC estimates show that its users already spend 60-plus minutes a day on its platform. As the company anticipates higher user engagement and new user growth, that bodes well for SKLZ stock. Additionally, Skillz represents a unique business model in the esports world.
Essentially, Skillz offers software that helps take a regular mobile game and turn it into an esports phenomenon. It helps host tournaments and also produces gameplay clips and highlights. If estimates are right and this market does hit $150 billion in 2025, SKLZ stock looks like a rather intriguing bet.
On the date of publication, Sarah Smith did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Sarah Smith is a Web Content Producer with InvestorPlace.com.
