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Why Cathie Wood’s Skillz Share Sale Shouldn’t Deter Investors

Low-priced stocks can move fast—in both directions. Case in point: online mobile gaming technology platform Skillz (NYSE:SKLZ). SKLZ stock has both soared and sunk during the past year.

A row of people wearing matching outfits and headsets play a video game together in a room with blue lighting.
Source: NYCStock / Shutterstock.com

And lately, Skillz hasn’t been a darling of the markets. Frankly, buyers’ enthusiasm has waned in recent months. Perhaps it’s because the economy is reopening and gaming may not be such a priority in people’s lives anymore.

To make matters worse, a very well-known fund has evidently divested a large number of SKLZ stock shares. This event, by itself, might have some folks worried. Yet, fear isn’t the right attitude now. The story of Skillz in 2021 is far from finished—and as we’ll see, the company’s aiming high in an exciting genre of action-packed gaming.

A Closer Look at SKLZ Stock

Suffice it to say that something unusual was definitely going on when SKLZ stock sailed from $27 to $46.30 in February. There didn’t seem to be any company-specific news catalysts to justify such a sharp share-price move.

Should the Reddit short-squeeze mob get the credit for this wild rally? It’s hard to prove or disprove this, but social-media traders may have been involved. After all, SKLZ stock was cheap and relatively unknown, making it a prime candidate for the Reddit crowd.

In any case, that pump didn’t last too long. Unfortunately, some folks ended up holding the bag as Skillz shares sank to $15 in April, and then $10 in August. By early October, SKLZ stock had fallen to $8 and change.

So, should today’s investors gobble up some shares in hopes of another Reddit raid? That’s not something people should count on. Instead, it’s better to keep up with Skillz’s latest developments—some of which are better than others.

Hunting for Profits

At the very least, we can say with confidence that Skillz is diversifying its gaming-market fare. Folks who don’t play video games might not appreciate this, but it’s big news for the company. Not long ago, Skillz launched a new entrant in the the hit hunting franchise, Big Buck Hunter called Big Buck Hunter: Marksman. It’s a competitive mobile game available on both iOS and Android.

This is special, first of all, because it represents Skillz’ inaugural first-person shooter title. Moreover, Marksman has topped the charts, reaching number-three in the sports category of popular apps on the App Store. The Big Buck Hunter franchise has proven to be quite lucrative, as it’s a cultural icon with a devoted fan base: Millions have spent hours playing this series of games at over 46,000 bars, restaurants and arcades around the world.

SKLZ Stock Dumped from the Ark

But even while Skillz is preparing its users for the next generation of gaming experiences, not everyone is loading up on SKLZ stock now. Apparently, Cathie Wood—or at least, one of her most famous funds—unloaded a sizable quantity of Skillz shares. The ARK Innovation ETF (NYSEARCA:ARKK) sold just under 1 million shares of SKLZ stock on Sept. 29, 2021.

Wood is influential among today’s traders, and some folks follow her funds for inspiration. That’s fine, but be advised that the report of a share sale doesn’t necessarily provide reasons for that sale.

Did it happen because the company’s in trouble? It’s possible but doesn’t seem reasonable,. Skillz has enjoyed 22 consecutive quarters of revenue growth. Instead of fretting, consider the possibility that Wood’s fund wanted to take profits. Also, the fund may have sought to free up capital to invest in other businesses.

The Bottom Line on SKLZ Stock

You might or might not be a gamer. Yet, there’s no point in trying to play a guessing game if we don’t know why Wood’s fund sold off those Skillz shares. Rather, let’s just focus on the company’s value proposition. Clearly, Skillz is capable of growing its revenues on a consistent basis.

And as far as gaming-platform advancement goes, there’s no denying it: Skillz is still at the top of its game.

On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.


Article printed from InvestorPlace Media, https://investorplace.com/2021/10/cathie-woods-sklz-stock-share-sale-shouldnt-deter-investors/.

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