Skillz Stock Sizzles on NFL Developer Deal
Posted on: February 4, 2021, 11:04h.
Last updated on: February 4, 2021, 12:24h.
Mobile games and esports tournament provider Skillz Inc. (NYSE:SKLZ) is on pace for its best day as a publicly traded company after announcing an agreement with the NFL.
The pact is unique compared to previous deals struck between gaming companies and professional sports leagues, in that it’s not about generating awareness of sports betting. Rather, the NFL and Skillz are teaming up to reach global game developers to crowdsource a future mobile esports product. Under the terms of the agreement, the league and the company are hosting a global game developer contest.
Competing developers will have the opportunity to develop an NFL-themed mobile game. The game will be powered by the Skillz esports platform and will have joint marketing support from both the NFL and Skillz,” according to a statement.
The aim is to leverage the NFL’s status as the most popular domestic sports league with the Skillz platform to create a new esports game.
The combination makes sense, because there are more than 2.7 billion active mobile gamers and 10 million developers around the world. The Skillz/NFL developer challenge starts in the second quarter and creators can pitch any genre except for a game that would be a direct simulation of traditional 11-on-11 football.
Skillz Stock: Hot New Gaming Idea
Skillz stock is another gaming name born out of a merger with a special purpose acquisition (SPAC). In fact, two of the founders of Flying Eagle Acquisition – the blank-check company Skillz merged with — created the SPAC DraftKings (NASDAQ:DKNG) and executed a reverse merger to become a public company last April.
Skillz officially became a freestanding company on Dec. 17 following the transaction that valued the San Francisco-based company at $3.5 billion. Since then, the stock roughly doubled when accounting for today’s more than 22 percent surge and its market capitalization ballooned to $9.12 billion.
Five analysts started coverage of Skillz stock over the past month, four with bullish ratings. The consensus price target on the name is $29.80, well below the $38.40 area at which it resides at this writing.
In its brief time as a public company, Skillz is catching the eyes of buy-side investors, too, joining the rosters of some well-known exchange traded funds (ETFs).
NFL Betting on Mobile Gaming Growth
Conventional wisdom holds that professional sports leagues are warming to regulated sports wagering because the industry is growing and it’s an avenue for bolstering fan engagement.
However, the forecasts for esports and mobile/social casinos are staggering. Market observers believe that could be a $150 billion-plus segment by 2025.
Total esports viewership is expected to grow at a 9% compound annual growth rate (CAGR) between 2019 and 2023, up from 454 million in 2019 to 646 million in 2023,” according to Insider Intelligence forecasts.
By that year, esports television viewership could top all US professional leagues except the NFL.
As for the mobile side of the equation, the NFL may have the right partner in Skillz. The company’s users spend 63 minutes a day playing its games — twice the industry average.
Additionally, the Skillz retention rate for customers playing a game for at least a month is 24 percent higher than that of its rivals. Nearly a third of Skillz users playing free games ultimately become paying customers, according to the company.
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