ARK Invest Buys 6 Million Shares of Skillz Stock. You Should Buy SKLZ, Too.


What Happened to the Skillz Stock Price Today?

A mobile gamer cheering on her smartphone with neon background.

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  • Shares of mobile esports technology company Skillz (NYSE:SKLZ) have staged an enormous rebound over the past few days, with SKLZ stock up more than 35% since Tuesday.
  • The catalyst? A bunch of buying from a well-respected growth-focused investment fund.

Why It Happened

  • In 2020, Cathie Wood and her fund — ARK Investment Management — emerged as the face of “innovation investing”, or investing in emerging companies that are pioneering innovative, new technologies. Her fund has returned about 180% over the past 12 months, so clearly, that team knows what they are doing.
  • ARK Invest went on a SKLZ stock buying spree over the past few days.
  • On Thursday and Wednesday of this week, ARK Invest collectively bought about 6.3 million shares of Skillz stock.
  • It’s a huge vote of confidence from a firm that has established itself as a credible thought leader in the emerging technology space.

Does It Matter?

  • This vote of confidence matters, yes.
  • But what matters more is that Skillz is fundamentally a very strong company.
  • Mobile gaming is very popular, and its popularity is only growing as mobile technology improves and smartphones proliferate across the globe.
  • But the unit economics of mobile gaming are broken. That is, it costs an arm-and-a-leg to get consumers to download your app, and the ads that run on those apps don’t pay very much. The result is a low customer lifetime value, and a high customer acquisition cost.
  • Skillz has created a technology platform to fix those broken economics, and usher in a new era of profitable mobile eSports.
  • In essence, Skillz has developed a suite of technology tools that allow mobile app developers to turn their apps in to real-money prize competitions, where consumers pay an entry fee to enter into a tournament or competition, which pays out real money to the winner.
  • It’s mobile competitive gaming, with real money.
  • Skillz’s secret sauce is a proprietary anti-cheat algorithm that keeps these games fair, because (unfortunately) cheating is very common in mobile eSports.
  • Mobile eSports is future of mobile gaming because it provides a win-win value prop. For gamers, you get to compete for the chance to win real money. For developers, you improve your unit economics by breaking away from the disastrous mobile app advertising model.
  • Skillz is at the epicenter of this future.
  • The long-term potential of SKLZ stock is enormous.

SKLZ Stock Price Forecast

  • The consensus sell-side price target on SKLZ stock is $29.
  • We think the analysts are being conservative here.
  • Our modeling suggests that SKLZ stock is worth about $40 today.
  • Either way, we expect Skillz stock to rally in a big way over the next 12 months.

Skillz stock belongs in a basket of high-quality, hypergrowth stocks with a ton of long-term potential that has been beaten and bruised over the past few weeks as the market has turned its back on early-stage growth companies.

Now is the time to buy these stocks.

These are the companies that are reimagining the digital landscape, as globalization and technological convenience converge. My favorite plays in this space are stocks in social media, esports, advertising, streaming media and iGaming.

Many of these stocks are deeply oversold, with 100%-plus upside potential from current levels. Right now, the tide appears to be turning in their favor.

SKLZ stock is just one of dozens of stocks out there that could give you big returns from current levels over the next few months and years. The others? Well, we have created a portfolio of stocks that we think represent the most innovative, most exciting early-stage tech stocks in the market with big-time upside potential.

To get the names, ticker symbols, and key business details of those potential 10X winners, subscribe to Innovation Investor here.

On the date of publication, Luke Lango did not have (either directly or indirectly) any positions in the securities mentioned in this article.

By uncovering early investments in hypergrowth industries, Luke Lango puts you on the ground-floor of world-changing megatrends. It’s how his Daily 10X Report has averaged up to a ridiculous 100% return across all recommendations since launching last May. Click here to see how he does it.

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