Even After Rising 26% This Past Week, Skillz (NYSE:SKLZ ... - Nasdaq

It's nice to see the Skillz Inc. (NYSE:SKLZ) share price up 26% in a week. But that isn't much consolation for the painful drop we've seen in the last year. Indeed, the share price is down a whopping 90% in the last year. It's not uncommon to see a bounce after a drop like that. The real question is whether the company can turn around its fortunes. We really hope anyone holding through that price crash has a diversified portfolio. Even when you lose money, you don't have to lose the lesson.

Although the past week has been more reassuring for shareholders, they're still in the red over the last year, so let's see if the underlying business has been responsible for the decline.

Because Skillz made a loss in the last twelve months, we think the market is probably more focussed on revenue and revenue growth, at least for now. Generally speaking, companies without profits are expected to grow revenue every year, and at a good clip. Some companies are willing to postpone profitability to grow revenue faster, but in that case one does expect good top-line growth.

In the last year Skillz saw its revenue grow by 46%. That's definitely a respectable growth rate. However, it seems like the market wanted more, since the share price is down 90%. It could be that the losses are too much for investors to handle without losing their nerve. It seems that the market has concerns about the future, because that share price action does not seem to reflect the revenue growth at all.

You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).

We consider it positive that insiders have made significant purchases in the last year. Having said that, most people consider earnings and revenue growth trends to be a more meaningful guide to the business. If you are thinking of buying or selling Skillz stock, you should check out this free report showing analyst profit forecasts.

A Different Perspective

Skillz shareholders are down 90% for the year, even worse than the market loss of 14%. That's disappointing, but it's worth keeping in mind that the market-wide selling wouldn't have helped. The share price decline has continued throughout the most recent three months, down 26%, suggesting an absence of enthusiasm from investors. Given the relatively short history of this stock, we'd remain pretty wary until we see some strong business performance. It's always interesting to track share price performance over the longer term. But to understand Skillz better, we need to consider many other factors. Consider for instance, the ever-present spectre of investment risk. We've identified 3 warning signs with Skillz , and understanding them should be part of your investment process.

Skillz is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.

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