Skillz Inc (NYSE: SKLZ) has been a hot topic of discussion this week, starting early when Cathie Wood, woman in charge at Ark Invest, added about 5 million shares of the stock to her portfolio. Now, the stock is hitting the tape again with yet another Ark addition, but that’s not the only reason to be excited.
Here’s the scoop:
Ark Invest Added 6 Million+ Shares Of SKLZ Stock This Week
It’s a hot topic, and for good reason. Cathie Wood is known as a genius in the stock market, producing outsized gains that few can compete with, and she’s making big moves surrounding Skillz stock.
In fact, Ark Invest, her fund, purchased around 6.2 million shares of the gaming company this week, which just so happens to be her biggest purchase to date.
This is huge news. Not only do retail investors tend to follow the big money, but Cathie Wood seems to have a crystal ball, telling her where all the biggest moves will be. So, when her firm jumps head first into a stock like Skillz, it’s going to make a splash, but as mentioned above, that’s not the only reason to be excited here.
Five Reasons Skillz Is An Exciting Stock
There are several reasons for investors to be excited about SKLZ stock. The most significant of these include:
- Massive Profit Margins. When was the last time you heard of a company that had a 95% profit margin? Well, if you’ve heard of Skillz, you’ve found it. At the moment, the company is reinvesting all of its profits into marketing and growth, but the profit margin without reinvestments sits at a whopping 95%. Considering that massive profit margin, it’s no surprise that the company is debt free and has a whopping $600 million+ on its balance sheet.
- Two Massive And Growing Markets. The Skillz platform was designed to allow betting between users that play mobile games. Both the mobile games market and the betting market are large, and growing fast. Moreover, regulatory changes on the betting side of the coin only opens the door to more growth ahead. In the next four years, the mobile gaming market is expected to double in value, and considering the unique capabilities of the Skillz platform, it only makes sense that the company will share in that growth.
- Global Expansion. The United States market is a massive one, and a great start. However, when it comes to the gaming industry, the United States only accounts for about 10% of the market. So, it’s no surprise that Skillz is working to become a global player. The company is working to expand to India at the moment, which has a larger gaming market that’s growing at a much faster rate than the United States. Interestingly, while Skillz has announced what it believes the cost of expansion will be, it hasn’t updated revenue projections. So the opportunity in India isn’t likely to have been priced into the value of the stock by the market yet, opening the door to a tremendous opportunity when it does.
- Product Expansion. In a recent interview, Andrew Paradise, the CEO of the company, said that he plans to gamify various experiences, including exercise and education. In fact, he even talked about what a partnership with Peloton would look like, a partnership that would allow people to compete with each other using Peloton equipment. Should this take place, it would be a huge step in the right direction for both companies.
- NFL Partnership. Finally, Skillz has partnered with the NFL surrounding a football-themed app that’s expected to launch this year. Considering the stature of the NFL, this will make expanding into partnerships with other sports organizations much easier. After all, the NFL is the big dog of sports, and when the big dog barks, the puppies tend to follow.
There’s Still The Matter Of Short Interest
Even with all of the positive information above, there’s still heavy short interest on the stock, sitting at over 23%. That just goes to show why retail investors are getting tired of big money short positions as they tend to target companies that investors are getting behind and that have the potential to do well.
Nonetheless, the heavy short interest and incredible opportunity have already started to make their rounds on the Wall Street Bets Reddit. This is the same social community that led to short squeezes in GameStop and several other big names.
Considering the fact that message volume surrounding SKLZ stock is heating up on the Reddit platform, there’s a strong chance that Skillz may be the next big short squeeze target, making the opportunity that much more appealing.
The Bottom Line
The bottom line here is simple. One of the most well-respected professionals on Wall Street has invested millions into Skillz, and hasn’t hid behind the curtain in doing so. When making that decision, she likely thought about all of the positive information above, combined with the fact that heavy short interest sets the stage for a short squeeze.
Ultimately, if you’re not in SKLZ stock yet, you may miss one of the biggest gainers of 2021.