On Monday, Stifel adjusted its outlook on Skillz Inc. (NYSE:SKLZ), a mobile gaming platform, by reducing the price target to $7 from the previous $8.50. Despite the decrease, Stifel continues to recommend a Buy rating on the shares.
The revision follows the examination of Skillz's financial model and the latest quarterly results released last week. Stifel's analysis anticipates a deeper adjusted EBITDA loss for 2024, now expected to be $34 million compared to the earlier estimate of a $12 million loss.
This reflects a downward revision in the projected GAAP revenue for 2024 to $127 million, indicating a 16% year-over-year decrease from the previously expected $145 million.
Looking further ahead, Stifel forecasts a modest adjusted EBITDA profit of $2 million for 2025, a new estimation accompanying a projected increase in GAAP revenue to $139 million. This would represent a 10% year-over-year growth for Skillz, suggesting a potential turnaround in financial performance.
The updated estimates by Stifel signal a cautious but still optimistic view of Skillz's financial trajectory, as the company navigates through its fiscal challenges. The Buy rating indicates a belief in the company's value proposition and potential for recovery in the longer term.
InvestingPro Insights
In light of Stifel's revised outlook on Skillz Inc. (NYSE:SKLZ), investors may find additional context from InvestingPro data and tips useful. The management's strategy of aggressively buying back shares could be a sign of confidence in the company's future, as highlighted by one of the InvestingPro Tips. Additionally, Skillz's financial position appears to be solid with more cash than debt on its balance sheet, and it boasts impressive gross profit margins. These factors may support the company's potential for recovery as suggested by Stifel's Buy rating.
However, it is important to note that analysts anticipate a sales decline in the current year, and the company is not expected to be profitable this year. Furthermore, the stock has recently suffered a significant drop, which may concern some investors. On the positive side, the company's liquid assets exceed its short-term obligations, providing some financial flexibility in the near term. For those interested in a deeper analysis, there are 12 additional InvestingPro Tips available at https://www.investing.com/pro/SKLZ, which could provide further insight into Skillz's investment potential. Use coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription for more detailed investment strategies.
InvestingPro Data metrics to consider include:
1. The stock's notable decline over the last week.
2. The lack of profitability over the last twelve months.
3. The absence of dividend payouts to shareholders, which may influence investment decisions for income-focused investors.
These insights could be pivotal in assessing whether Skillz Inc. aligns with individual investment strategies and risk profiles, especially in light of the company's current challenges and market dynamics.
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