May 22, 2021
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Transcript

Marko Rojnica

Skillz is a leading mobile games platform that connects players through competition, allowing them to place bets on themselves and make money as they win matches against other players.

SKLZ came public through a SPAC deal that started at $10 in September 2020 and then $15 when the deal came through in December.

On January 4th, Cathie Wood’s ARKW started buying SKLZ.

Then on January 11th, Citigroup upgraded SKLZ to a “buy rating” and a $27 price target.

And on February 4th... big news came in! SKLZ announced a huge brand deal with the NFL, pushing the stock to a new high of $39!

Buyers thought there was a much bigger opportunity, kept buying and buying, pushing the stock to it’s all time high of $46, before the party ended.

On March 8th, SKLZ was hit by a short-seller report that knocked the stock down to $23.

A secondary offering by the company was the next blow. Followed by momentum selloff in April. It didn't help that SKLZ earnings didn't meet expectations.

After this wild ride, Cathie Wood is back in the name buying even more shares.

So, where is SKLZ going next and how can we use Options to profit from it? I’ll walk you through the bull case and the bear case, then we’re going to get Felix Frey on to give us his view of the stock and even better, he’s going to show us a few different Options trading ideas that you can do in SKLZ, so stay tuned, you don’t want to miss it!

So, we have a stock that made a huge move from December 2020 to early February of 2021, only to make a roundtrip back to the current level of $15.

My name is Marko Rojnica and I’m going to lead you through the bull points, and the bear points of SKLZ… then we’re going to get Felix Frey on to give us his view on the stock, and more importantly, he’s going to show us different Options plays, no matter if you’re bullish or bearish…

What is Skillz?

But first, what is Skillz?

Skillz was started in 2012 by a serial entrepreneur and current CEO Andrew Paradise. Let’s listen to him describe Skillz...

1:05 - 1:24

That was exactly my question… What does that even mean?

Let me make it simple, because that’s a lot of buzzwords.

SKLZ is just like any app on your phone. Once you download that app, you can choose from any number of games in several different categories. The games are free or you can play a variety of different competitions, such as tournaments … or head to head 1v1 games.

If you choose to play for a cash prize, then there are different price levels for each game. The higher the entry cost, the higher the payout prize… with some tournament prizes going as high as $1300!

It's important to note that SKLZ does not own the games. They are the platform that offers the developers an audience and the wagering software. They take a commission from each game played and share those revenues with the developer... and there are a lot of them! SKLZ has over 20,000 developers creating games for the platform!

So, now that we know how Skillz works, let’s take a look at the first bullish point!

1) Strong Growth Strategy

Skillz is, no doubt, the leader in the mobile gaming competition space, with the average player spending as much as 60 minutes a day on the platform, beating giants like TikTok, YouTube, Facebook, Snapchat, let alone other mobile gaming companies.

When looking at their numbers, we can confidently say that they’re going in the right direction.

Skillz has 467,000 Paying Monthly Active Users, growing 81% Year-over-Year during the last quarter. 

Their Total Monthly Active Users are 2.75 million. This means that 17% of them are actually paying customers.

That’s pretty impressive!

To add to that, their revenue growth Year over Year is 92% and their gross margins are a staggering 95%. Compare that to Zynga’s 59% and Glu Mobile’s 65% gross margins, you can see that Skillz is ahead of the curve.

On top of that, they have over $600M in cash and they have no debt.

The company’s primary marketing goal to increase revenues is directed at the most obvious opportunity - converting current non-paying Monthly Active Users into Paying Monthly Active Users.

Another growth opportunity comes from greater expansion into Android. While Android users grow 2x faster than iOS users, they only represent 14% of Skillz total revenues. The issue is that Android users can only download the app through the Skillz’s website because the app is currently banned from Google Play Store for being a “betting” app. 

The company is in ongoing talks with Google requesting re-entry on the grounds that SKLZ is not a “betting” app since players use their own skill, rather than luck.

Inclusion in the Google Play Store would create a huge market opportunity for Skillz.

SKLZ is also looking to expand Internationally, where the mobile gaming market is 4x larger than North America, but only represents 10% of their revenues.

They plan on launching their app in India later this year.

The opportunity there is immense. India would increase their addressable market by 65% growing 4x faster than the US. 

Lastly, given their business model, adding ambassadors like Penn Gaming did with Dave Portney, or Subway with Milad, could dramatically increase organic growth and profitability.

This leads us into the Bull point #2.

2) Game Diversification

Part of being a great platform is having different games, genres and attracting different people.

Obviously, the NFL has one of the largest and most loyal audiences in the US, so when Skillz announced the partnership with the NFL, the stock exploded higher.

This partnership allows game developers to submit their games to be a part of the Skillz platform and have the rights to brand their name with the NFL and their logos.

It’s an incredible opportunity for Skillz to become mainstream.

On top of that, they’re also heavily invested into expanding their content library to include a wider variety of different types of games that range from first person shooters to real time strategy & battle royales, similar to games like Call of Duty and Fortnite.

These types of games have proven to be very successful, and if Skillz is able to replicate such an experience on mobile, with the addition of paid competition, you have a winning combination.

It’s also important to note the potential for a new hit game. As the platform grows and more developers join, there’s an infinite potential for new games becoming hits, and if we look at the numbers, there were only 7 games with revenues of more than $1 million in 2016, while in 2020, there were 36 such games.

Let’s now take a look at the 3rd bullish point, and that is...

3) Cathie Wood & ARKK Following

Cathie Wood has made herself famous in the last 3 years by investing in high-growth, disruptive, momentum stocks. She’s constantly talking about the long-term plan, asking investors to think 5 years out. The CEO has a little bit of a longer plan, but I’ll let him tell you.

0:50 - 1:01 & 1:24 - 2:01

100 year plan… it sounds very “controversial,” but if you pay attention to what the CEO said, his vision expands from mobile games ... into everything internet device related.

He gave an example of Peloton, but the opportunities are endless. The Skillz technology could be implemented into all devices that have competition potential, making Skillz the #1 platform in that realm.

With a huge addressable market and boundless potential, this disruptive technology stock caught Cathie Wood’s attention.

Her ARKK fund owns 15.3 million shares of Skillz, comprising 1.23% of the portfolio, and her ARKW fund owns 7.66 million shares of Skillz, comprising 2.32% of the portfolio.

But it’s not just Cathie Wood and the ARK funds. She has an army of retail investors who seemingly follow her every move and Skillz is one of them.

1) Problems with the Skillz Growth Plan

Let’s start with their marketing and acquisition costs.

These are insanely high, and yet are yielding very little in return. 

They’re spending over $206 in sales and marketing in each quarter per each paying customer. 

In Q1 2021, they spent $96.3 million, up from $46.8 million last year. And doubled their losses!

Their adjusted EBITDA loss was $31.1 million in Q1, which is up from $14.6 million last year. 

Even worse, they didn’t increase their Monthly Active Users.So to achieve their goal of converting existing non-paying gamers into payors, they had to double their marketing spend, double their losses, and fail to increase their Monthly Active Users, which are their future paying customers.

Now let’s take a closer look at their Revenues...

Skillz Top 3 games are Solitaire Cube, 21 Blitz, and Blackout Bingo. They made up 87% of their revenues in 2020. 

And, remember those 20,000 developers?

Those Top 3 games come from only 2 developers, Tether and Big Run.

But, hey, it’s easy to create a “Hit” game, right?

Not really.

The company even points out that...

“Only 2% of game developers reach break-through success, and the Skillz platform enables the other 98% to create long-term sustainable businesses.”

2%!!! 

That’s not a lot. And the shorts are pointing out that the Skillz games are not original.

But even if they were original, the retention rates in this business are low because most people lose their money the more they play. 

From discussion with the game studios, 25% of new paying users churn after Day 1, 75% churn by day 30, and 95% churn after day 180!

And when or IF a game does become successful, what’s stopping the developers from leaving Skillz to launch their own paid competition platform integrated with that game?

Remember, Skillz is just the platform.

So, with 87% of revenues coming from 3 games by 2 studios, Skillz is left vulnerable to any defections. 

This is risky!

Don’t think it could happen? Think again.

Right now, Skillz is suing Avia Games for “working with Skillz to develop a game as a front to rip off the company’s core technology.” 

Since working with Skillz, Avia Games launched its own version of many of Skillz's most popular games with its own similar wagering system built in.

But that’s not all…

Digging deeper into the revenues, you learn that Skillz is also highly dependent on the “super-whales.” 

Super whales are the top 1-2% of players that are truly bringing in the most frequent and largest rakes.... So in reality, Skillz has around 40k super Monthly Active Users driving the majority of the revenue.

Adding to that, the fact that a Skillz user currently needs a 60% win rate just to break even on their bets over time.

Also, not everyone has the same level of skill.

Like in the elite sports level, the top performers are the ones who rise to the top, win most of the competitions and make most of the money.

Skillz even acknowledges this in their “How it Works” video.

0:23 - 0:51

Can everyone achieve that level of Skill?

Eventually, those people might get frustrated and quit because they’re not accomplishing their initial goal…  making money by competing against other players.

That’s why Skillz is focused on the huge international & Android expansion plan, says the bull.

Not so fast, says the bear.

The obvious problem with the Indian market is that 90% of them use Android, whose main app store has Skillz banned. And with a recent update to Google's terms, that status hadn't changed.

The next obvious problem is the average salary is $400-500 per month. So, India might get Skillz more Monthly Active Users, but when it comes to paid, the Bears are very doubtful.

Let’s now take a look at the 2nd bearish point…

2) Unsustainable Leadership Model

The bears say the reason for their weak game performance as a whole is mostly due to the fact that they have “white label” games that aren’t unique and can be easily replicated.

There’s also an argument that only the failing developers that weren’t able to monetize through the tried and tested means of monetization are making games for Skillz. 

What are the tried and tested means of monetization?

Primarily freemium models (think of Call of Duty: Warzone and Fortnite) that are based around microtransactions, along with pay-2-win games and ad-based games.

What’s going to happen when a giant like Steam, Activision or Epic Games launches their cross-platform competition project with blockbuster games that have a proven success record over decades?

The CEO also states that Skillz never knows which new game might be a “hit”, thus making the company a lot of money.

But the bears see a problem with that...

Because those “new hits” might never come, and even if they do, they might not be sustainable over the long run, creating a need for constant emergence of such games.

The bears also don’t like the fact that they’re not in control of the game development system and have to rely on individual developers.

Lastly, what if the NFL deal, which was the main facilitator of the stock jump, simply flops and doesn’t produce games people like, play, and spend money on over a significant period of time? That might seriously hurt the stock.

With all of that in mind, let’s look at the last bear argument, and that is…

3) Insider Selling & Previous Flops of Similar Business Models

The bears love to start off with CEOs comments regarding the 100 year focus. 100 years is a loooooong time.

Seems like the CEO couldn’t wait even a year.

He sold Skillz stock just 90 days into being a public company!

Maybe he knows what history tells us…

If we look at previous & existing skill-based gaming competition companies, we can quickly see that it’s not either a new, or a very successful business model.

CashPlay launched at a similar time as Skillz. The business model was virtually identical. The company closed down shop after they reached 3 million Monthly Active Users because they were unable to meaningfully improve user attrition and cross-play activity, or reduce their dependence on the top titles.

WorldWinner was founded in 1999, it was launched as the first online cash-based skill-gaming platform with integration to various popular gaming portals like Yahoo! and Shockwave. Since then, the company has changed hands multiple times and was sold to GSN in 2007. It’s still operating the standard set of skill-game apps that Skillz also has, such as Solitaire, Scrabble etc. But you don’t hear about this company changing the world, do you?

Amazon GameOn tried duplicating this model back in 2018 with its GameOn API offering that allowed for developers to enable matchmaking except it offered prizes and items from Amazon instead of cash to avoid KYC rules. Since then, they shuttered this offering and pivoted the segment to be a video sharing app for in-game clips. If Amazon decides something isn’t worth pursuing, that speaks volume.

Miniclip is a popular giant in the space of browser games. They launched a skill-based cash site back in 2004 using Game Trust. Not long after, they realized that the free to play model was the better alternative. They found that the user retention was low and that paid user conversions were fleeting.

Will Skillz be different?

Maybe. 

But, you have a CEO who’s a lifelong entrepreneur... who created 5 different companies and exited 3 successfully as a founder... telling you to think in terms of 100 years when he’s already selling after 90 days. 

Will he stick around to accomplish the vision or simply move on to the next big thing?

Time will tell.

Now that we covered both bullish and the bearish points, let’s quickly compare them before we move on to the trade ideas.

Bullish Points

  • Strong Growth Strategy
  • Game Diverisification Plan
  • Cathie Wood & ARK Following

Bearish Points

  • Problems with the Skillz Growth Plan
  • Unsustainable "Leadership" Model
  • Insider Selling & Previous Flops of Similar Business Models

Those were the bullish and the bearish points of Skillz, so now let’s get Felix Frey on to show us a few different trading ideas that we can do if we’re either bearish or bullish, and if we’re either thinking long term or short term, so stick around, the best is about to come!

Felix Frey

Coming soon

Marko Rojnica

Thank you Felix for giving us a few different Options Trades to consider in Skillz…

Now, if you enjoyed the video, please leave a like 

AND if you’d like to see more stock analysis just like this one… 

make sure you subscribe to the channel and turn on the bell notifications.

Also, I would love to hear your thoughts on Skillz... And I’d like YOU to add to the story.

Comment your thoughts & opinions on the bullish & bearish cases we’ve made…

… and tell us where you think Skillz is going next.

OptionsGeek also has a comprehensive Options education program called 3 Steps to Profit that teaches you how to Trade Options like the Top 1%.

As a bonus, you also get 1 month free of Felix Frey’s Winning Picks Premium ideas, so make sure you check the link in the description!

Get 3 Steps to Profit + 1 Month of Free Winning Picks Premium Ideas

Thank you, I’ll see you in the next one.

Watch Next

CCIV Stock Trade Ideas & Bull vs Bear Analysis

Find Your Next Idea


Transcript

Marko Rojnica

Skillz is a leading mobile games platform that connects players through competition, allowing them to place bets on themselves and make money as they win matches against other players.

SKLZ came public through a SPAC deal that started at $10 in September 2020 and then $15 when the deal came through in December.

On January 4th, Cathie Wood’s ARKW started buying SKLZ.

Then on January 11th, Citigroup upgraded SKLZ to a “buy rating” and a $27 price target.

And on February 4th... big news came in! SKLZ announced a huge brand deal with the NFL, pushing the stock to a new high of $39!

Buyers thought there was a much bigger opportunity, kept buying and buying, pushing the stock to it’s all time high of $46, before the party ended.

On March 8th, SKLZ was hit by a short-seller report that knocked the stock down to $23.

A secondary offering by the company was the next blow. Followed by momentum selloff in April. It didn't help that SKLZ earnings didn't meet expectations.

After this wild ride, Cathie Wood is back in the name buying even more shares.

So, where is SKLZ going next and how can we use Options to profit from it? I’ll walk you through the bull case and the bear case, then we’re going to get Felix Frey on to give us his view of the stock and even better, he’s going to show us a few different Options trading ideas that you can do in SKLZ, so stay tuned, you don’t want to miss it!

So, we have a stock that made a huge move from December 2020 to early February of 2021, only to make a roundtrip back to the current level of $15.

My name is Marko Rojnica and I’m going to lead you through the bull points, and the bear points of SKLZ… then we’re going to get Felix Frey on to give us his view on the stock, and more importantly, he’s going to show us different Options plays, no matter if you’re bullish or bearish…

What is Skillz?

But first, what is Skillz?

Skillz was started in 2012 by a serial entrepreneur and current CEO Andrew Paradise. Let’s listen to him describe Skillz...

1:05 - 1:24

That was exactly my question… What does that even mean?

Let me make it simple, because that’s a lot of buzzwords.

SKLZ is just like any app on your phone. Once you download that app, you can choose from any number of games in several different categories. The games are free or you can play a variety of different competitions, such as tournaments … or head to head 1v1 games.

If you choose to play for a cash prize, then there are different price levels for each game. The higher the entry cost, the higher the payout prize… with some tournament prizes going as high as $1300!

It's important to note that SKLZ does not own the games. They are the platform that offers the developers an audience and the wagering software. They take a commission from each game played and share those revenues with the developer... and there are a lot of them! SKLZ has over 20,000 developers creating games for the platform!

So, now that we know how Skillz works, let’s take a look at the first bullish point!

1) Strong Growth Strategy

Skillz is, no doubt, the leader in the mobile gaming competition space, with the average player spending as much as 60 minutes a day on the platform, beating giants like TikTok, YouTube, Facebook, Snapchat, let alone other mobile gaming companies.

When looking at their numbers, we can confidently say that they’re going in the right direction.

Skillz has 467,000 Paying Monthly Active Users, growing 81% Year-over-Year during the last quarter. 

Their Total Monthly Active Users are 2.75 million. This means that 17% of them are actually paying customers.

That’s pretty impressive!

To add to that, their revenue growth Year over Year is 92% and their gross margins are a staggering 95%. Compare that to Zynga’s 59% and Glu Mobile’s 65% gross margins, you can see that Skillz is ahead of the curve.

On top of that, they have over $600M in cash and they have no debt.

The company’s primary marketing goal to increase revenues is directed at the most obvious opportunity - converting current non-paying Monthly Active Users into Paying Monthly Active Users.

Another growth opportunity comes from greater expansion into Android. While Android users grow 2x faster than iOS users, they only represent 14% of Skillz total revenues. The issue is that Android users can only download the app through the Skillz’s website because the app is currently banned from Google Play Store for being a “betting” app. 

The company is in ongoing talks with Google requesting re-entry on the grounds that SKLZ is not a “betting” app since players use their own skill, rather than luck.

Inclusion in the Google Play Store would create a huge market opportunity for Skillz.

SKLZ is also looking to expand Internationally, where the mobile gaming market is 4x larger than North America, but only represents 10% of their revenues.

They plan on launching their app in India later this year.

The opportunity there is immense. India would increase their addressable market by 65% growing 4x faster than the US. 

Lastly, given their business model, adding ambassadors like Penn Gaming did with Dave Portney, or Subway with Milad, could dramatically increase organic growth and profitability.

This leads us into the Bull point #2.

2) Game Diversification

Part of being a great platform is having different games, genres and attracting different people.

Obviously, the NFL has one of the largest and most loyal audiences in the US, so when Skillz announced the partnership with the NFL, the stock exploded higher.

This partnership allows game developers to submit their games to be a part of the Skillz platform and have the rights to brand their name with the NFL and their logos.

It’s an incredible opportunity for Skillz to become mainstream.

On top of that, they’re also heavily invested into expanding their content library to include a wider variety of different types of games that range from first person shooters to real time strategy & battle royales, similar to games like Call of Duty and Fortnite.

These types of games have proven to be very successful, and if Skillz is able to replicate such an experience on mobile, with the addition of paid competition, you have a winning combination.

It’s also important to note the potential for a new hit game. As the platform grows and more developers join, there’s an infinite potential for new games becoming hits, and if we look at the numbers, there were only 7 games with revenues of more than $1 million in 2016, while in 2020, there were 36 such games.

Let’s now take a look at the 3rd bullish point, and that is...

3) Cathie Wood & ARKK Following

Cathie Wood has made herself famous in the last 3 years by investing in high-growth, disruptive, momentum stocks. She’s constantly talking about the long-term plan, asking investors to think 5 years out. The CEO has a little bit of a longer plan, but I’ll let him tell you.

0:50 - 1:01 & 1:24 - 2:01

100 year plan… it sounds very “controversial,” but if you pay attention to what the CEO said, his vision expands from mobile games ... into everything internet device related.

He gave an example of Peloton, but the opportunities are endless. The Skillz technology could be implemented into all devices that have competition potential, making Skillz the #1 platform in that realm.

With a huge addressable market and boundless potential, this disruptive technology stock caught Cathie Wood’s attention.

Her ARKK fund owns 15.3 million shares of Skillz, comprising 1.23% of the portfolio, and her ARKW fund owns 7.66 million shares of Skillz, comprising 2.32% of the portfolio.

But it’s not just Cathie Wood and the ARK funds. She has an army of retail investors who seemingly follow her every move and Skillz is one of them.

1) Problems with the Skillz Growth Plan

Let’s start with their marketing and acquisition costs.

These are insanely high, and yet are yielding very little in return. 

They’re spending over $206 in sales and marketing in each quarter per each paying customer. 

In Q1 2021, they spent $96.3 million, up from $46.8 million last year. And doubled their losses!

Their adjusted EBITDA loss was $31.1 million in Q1, which is up from $14.6 million last year. 

Even worse, they didn’t increase their Monthly Active Users.So to achieve their goal of converting existing non-paying gamers into payors, they had to double their marketing spend, double their losses, and fail to increase their Monthly Active Users, which are their future paying customers.

Now let’s take a closer look at their Revenues...

Skillz Top 3 games are Solitaire Cube, 21 Blitz, and Blackout Bingo. They made up 87% of their revenues in 2020. 

And, remember those 20,000 developers?

Those Top 3 games come from only 2 developers, Tether and Big Run.

But, hey, it’s easy to create a “Hit” game, right?

Not really.

The company even points out that...

“Only 2% of game developers reach break-through success, and the Skillz platform enables the other 98% to create long-term sustainable businesses.”

2%!!! 

That’s not a lot. And the shorts are pointing out that the Skillz games are not original.

But even if they were original, the retention rates in this business are low because most people lose their money the more they play. 

From discussion with the game studios, 25% of new paying users churn after Day 1, 75% churn by day 30, and 95% churn after day 180!

And when or IF a game does become successful, what’s stopping the developers from leaving Skillz to launch their own paid competition platform integrated with that game?

Remember, Skillz is just the platform.

So, with 87% of revenues coming from 3 games by 2 studios, Skillz is left vulnerable to any defections. 

This is risky!

Don’t think it could happen? Think again.

Right now, Skillz is suing Avia Games for “working with Skillz to develop a game as a front to rip off the company’s core technology.” 

Since working with Skillz, Avia Games launched its own version of many of Skillz's most popular games with its own similar wagering system built in.

But that’s not all…

Digging deeper into the revenues, you learn that Skillz is also highly dependent on the “super-whales.” 

Super whales are the top 1-2% of players that are truly bringing in the most frequent and largest rakes.... So in reality, Skillz has around 40k super Monthly Active Users driving the majority of the revenue.

Adding to that, the fact that a Skillz user currently needs a 60% win rate just to break even on their bets over time.

Also, not everyone has the same level of skill.

Like in the elite sports level, the top performers are the ones who rise to the top, win most of the competitions and make most of the money.

Skillz even acknowledges this in their “How it Works” video.

0:23 - 0:51

Can everyone achieve that level of Skill?

Eventually, those people might get frustrated and quit because they’re not accomplishing their initial goal…  making money by competing against other players.

That’s why Skillz is focused on the huge international & Android expansion plan, says the bull.

Not so fast, says the bear.

The obvious problem with the Indian market is that 90% of them use Android, whose main app store has Skillz banned. And with a recent update to Google's terms, that status hadn't changed.

The next obvious problem is the average salary is $400-500 per month. So, India might get Skillz more Monthly Active Users, but when it comes to paid, the Bears are very doubtful.

Let’s now take a look at the 2nd bearish point…

2) Unsustainable Leadership Model

The bears say the reason for their weak game performance as a whole is mostly due to the fact that they have “white label” games that aren’t unique and can be easily replicated.

There’s also an argument that only the failing developers that weren’t able to monetize through the tried and tested means of monetization are making games for Skillz. 

What are the tried and tested means of monetization?

Primarily freemium models (think of Call of Duty: Warzone and Fortnite) that are based around microtransactions, along with pay-2-win games and ad-based games.

What’s going to happen when a giant like Steam, Activision or Epic Games launches their cross-platform competition project with blockbuster games that have a proven success record over decades?

The CEO also states that Skillz never knows which new game might be a “hit”, thus making the company a lot of money.

But the bears see a problem with that...

Because those “new hits” might never come, and even if they do, they might not be sustainable over the long run, creating a need for constant emergence of such games.

The bears also don’t like the fact that they’re not in control of the game development system and have to rely on individual developers.

Lastly, what if the NFL deal, which was the main facilitator of the stock jump, simply flops and doesn’t produce games people like, play, and spend money on over a significant period of time? That might seriously hurt the stock.

With all of that in mind, let’s look at the last bear argument, and that is…

3) Insider Selling & Previous Flops of Similar Business Models

The bears love to start off with CEOs comments regarding the 100 year focus. 100 years is a loooooong time.

Seems like the CEO couldn’t wait even a year.

He sold Skillz stock just 90 days into being a public company!

Maybe he knows what history tells us…

If we look at previous & existing skill-based gaming competition companies, we can quickly see that it’s not either a new, or a very successful business model.

CashPlay launched at a similar time as Skillz. The business model was virtually identical. The company closed down shop after they reached 3 million Monthly Active Users because they were unable to meaningfully improve user attrition and cross-play activity, or reduce their dependence on the top titles.

WorldWinner was founded in 1999, it was launched as the first online cash-based skill-gaming platform with integration to various popular gaming portals like Yahoo! and Shockwave. Since then, the company has changed hands multiple times and was sold to GSN in 2007. It’s still operating the standard set of skill-game apps that Skillz also has, such as Solitaire, Scrabble etc. But you don’t hear about this company changing the world, do you?

Amazon GameOn tried duplicating this model back in 2018 with its GameOn API offering that allowed for developers to enable matchmaking except it offered prizes and items from Amazon instead of cash to avoid KYC rules. Since then, they shuttered this offering and pivoted the segment to be a video sharing app for in-game clips. If Amazon decides something isn’t worth pursuing, that speaks volume.

Miniclip is a popular giant in the space of browser games. They launched a skill-based cash site back in 2004 using Game Trust. Not long after, they realized that the free to play model was the better alternative. They found that the user retention was low and that paid user conversions were fleeting.

Will Skillz be different?

Maybe. 

But, you have a CEO who’s a lifelong entrepreneur... who created 5 different companies and exited 3 successfully as a founder... telling you to think in terms of 100 years when he’s already selling after 90 days. 

Will he stick around to accomplish the vision or simply move on to the next big thing?

Time will tell.

Now that we covered both bullish and the bearish points, let’s quickly compare them before we move on to the trade ideas.

Bullish Points

  • Strong Growth Strategy
  • Game Diverisification Plan
  • Cathie Wood & ARK Following

Bearish Points

  • Problems with the Skillz Growth Plan
  • Unsustainable "Leadership" Model
  • Insider Selling & Previous Flops of Similar Business Models

Those were the bullish and the bearish points of Skillz, so now let’s get Felix Frey on to show us a few different trading ideas that we can do if we’re either bearish or bullish, and if we’re either thinking long term or short term, so stick around, the best is about to come!

Felix Frey

Coming soon

Marko Rojnica

Thank you Felix for giving us a few different Options Trades to consider in Skillz…

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Comment your thoughts & opinions on the bullish & bearish cases we’ve made…

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OptionsGeek also has a comprehensive Options education program called 3 Steps to Profit that teaches you how to Trade Options like the Top 1%.

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Thank you, I’ll see you in the next one.

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