Is it too late to buy Skillz stock as shares spike on above-average trading volume?
On Tuesday, Skillz Inc. (NYSE:SKLZ) shares advanced by more than 13% amid increased trading volume. The stock had registered more than 10 million in trading volume by 1:00 pm EST, on course to surpass its daily average of about 14.76 million. The stock ended the session with a volume of 12.96 million, slightly below the daily average.
The multiplayer mobile and online gaming company announced plans to buy Aarki, an intuitive AI platform that enables brands to re-engage mobile users using machine learning, big data, and engaging creativity.
Skillz CEO Andrew Paradise spoke at the Canaccord Genuity Digital Gaming Summit, ensuring investors of his company’s commitment to completing the $150 million cash and stock acquisition.
Analysts think the purchase could help Skillz monetize its connected user-base by providing marketing insights to brands.
Is Skillz a value trap?Copy link to section
From an investment perspective, Skillz shares trade at a lucrative P/E ratio of 4.68, making the stock an exciting option for bargain hunters.
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However, with analysts expecting its earnings per share to plummet by more than 474% this year before bouncing back by 31.70% next year, Skillz may not be an ideal option for long-term growth investors.
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Therefore, the current valuation demonstrates the discount attached to the stock price due to the risks of investing long-term.
Technically, Skillz shares seem to have recently spiked to complete an upward breakout from a sharply descending channel formation. As a result, the stock has fully recovered from oversold conditions.
Therefore, investors could target a technical pullback at about $8.69, or lower at $7.63, while $10.61 and $11.67 are crucial resistance zones.