Despite the absence of company-specific news, Skillz stock is shooting up 13.5% higher this morning. However, this is a day when both the Dow Jones Industrial Average and the S&P 500 are having an up day.
As of 10:51 a.m. Eastern Time, Skillz stock has risen above $1 per share.
The market is placing many bets that Skillz (NYSE:SKLZ) won’t have much longer to live. Because the company has lost over 90% of its value over the last year, over 20% of its shares are now being sold short. Although current macroeconomic developments are making it more difficult for the gaming platform to make a comeback, Skillz’s mistakes along the road led to it being in this situation in the first place.
It had previously adopted a policy of expansion at any cost, which meant that it was spending money that it did not have; in other words, it was buying growth rather than earning it. And now that it has reduced the amount of work it was put into, Skillz’s financial outcomes are dismal.
Skillz (NYSE:SKLZ) reported a 22% loss in sales the previous month, with engagement marketing contributing to a 16% fall in revenue. It would seem that Skillz stock is another firm that had the mistaken belief that the epidemic period of engagement experienced during lockdowns would be the new normal; however, this is not proving to be the case.
Skillz stock is likely to be more volatile due to the large degree of short interest in the company’s shares; today’s upward rise might result from a short squeeze or some other kind of market intervention. However, collapses almost always follow. Since the esports stock is expected to continue suffering significant losses for the foreseeable future, investors should stay away from the game.
Even though there has been no new information on the firm, investors have been bullish on Skillz stock.
Featured Image – Megapixl © Michaeljayberlin