When it comes to Skillz (NYSE:SKLZ), bulls have seen the bears take control of the technical turf on the price chart. But is it a game-over situation for Skillz investors? Let’s look at what’s happening off and on the SKLZ stock price chart, then offer a well-aligned, risk-adjusted determination with those findings.
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Mobile gaming and esports platform Skillz. It could be one of the next big things for Wall and Main Streets. But you wouldn’t know it based on today’s and this year’s stock performance. Shares of SKLZ are off 37% year-to-date as investors look to close out a couple of dismal-looking trading months.
Not that SKLZ is alone. ChargePoint Holdings (NYSE:CHPT). Open Technologies (NASDAQ:OPEN). fuboTV (NYSE:FUBO). If misery loves company, the SPAC has plenty of diverse growth investors to commensurate with.
And without passing judgment, for good reason too.
Today’s game being played on Wall Street has been a punishing one for higher and incalculable multiple stocks amid a tactical rotation into more mainstay, big league stocks ranging from Home Depot (NYSE:HD) to Microsoft (NASDAQ:MSFT). It is what it is.
Still and in keeping score amid this line-up change, SKLZ is sporting an ugly monthly “gain” by the bears of 34% following March’s fumble of nearly 40% and February’s last hurrah victory of 14.45%.
Game on for SKLZ Stock?
Before investors throw in the towel on 2021, the second-half of play could reasonably offer Skillz investors a big come-from-behind win.
Unlike many of Skillz’s more speculative peer group, SKLZ isn’t simply firing blanks and talking a big game only. Nikola (NASDAQ:NKLA). QuantumScape (NYSE:QS) or Hyliion (NASDAQ:HYLN). They’re among a deflated SPAC group offering more promise than substance. But Skillz is different in that respect.
SKLZ is already offering successful esports games and tournaments with real money prizes to players. The outfit is also smartly differentiating its business model and building additional revenues by allowing game developers the ability to monetize their content five times better than ads or through in-app purchases, according to Skillz.
Bottom-line and in spying Skillz’s trailing 12-month sales of $230 million and year-over-year revenue growth of nearly 95%, you could say SKLZ stock is a win-win situation rather than a game-over scenario. But in smartly suiting up to take the field, bullish investors may still be wise to wait on the SKLZ price chart to confirm it’s game time.
SKLZ Weekly Price Chart
Source: Charts by TradingView
Stock corrections happen to even the best of them. Earlier this year, big league champ Apple (NASDAQ:AAPL) or EV giant Tesla (NASDAQ:TSLA) were sufficient proof of that reality. In that regard, Skillz is in good company. However and as the illustrated weekly chart of SKLZ stock reveals, today’s bearish cycle does have a couple strikes still working against it.
For a stock of SKLZ’s caliber, 30% declines during the best of times is par for the course. As much and in our current and more challenging SPAC environment, it would be shortsighted to knock Skillz’s much larger-than-normal correction. For the statisticians out there, from early February’s all-time-high of $46.30 that number stands at a whopping 73%.
What’s technically more concerning is early March’s weekly hammer failure through 62% support followed by a doji decision candle challenging the 76% Fibonacci level a couple weeks later holding. Moreover, at today’s SKLZ stock price of $12.55, shares sporting a bearishly-aligned stochastics and more than a few SPAC’s slammed beneath their $10 initial offering price, downside risk of 20% or more is a growing threat.
What to Do?
For now, and if you’re looking to buy Skillz at a price which has a fighting chance of standing its ground, SKLZ stock isn’t likely there yet. But if you’re going to suit up as a bull regardless of today’s price chart, I’d advise keeping a smaller wager limited to a slightly out-of-the-money June or August bull call spread for a well-positioned defense with the promise of decent offensive profit potential.
On the date of publication Chris Tyler and / or accounts under management do hold positions in any securities mentioned in this article.
Chris Tyler is a former floor-based, derivatives market maker on the American and Pacific exchanges. The information offered is based on his professional experience but strictly intended for educational purposes only. Any use of this information is 100% the responsibility of the individual. For additional market insights and related musings, follow Chris on Twitter @Options_CAT and StockTwits.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.