Today I will analyze and compare Skillz (SKLZ) and Playtika Holding (PLTK) to determine which gaming stock is currently the best buy.
Gambling consists of playing electronic games through different electronic devices such as computers, mobile phones, consoles or other media. Mobile gaming has become one of the most popular forms of gambling in the world, due to its relatively affordable price.
According to Intelligence of Mordorthe global mobile games market is expected to grow at a CAGR of 12.3% between 2022 and 2027. Market growth is expected to be driven by increasing adoption of trending technologies for game development and growing smartphone penetration.
Based in San Francisco, California, Skillz is a technology company that enables mobile game developers to deliver tournaments and award competitive gaming activities to end users around the world. Founded in 2010, Playtika is an Israel-based company that develops mobile games in the United States and around the world. The company’s portfolio includes casual and casino-themed games.
Year-to-date (YTD), SKLZ shares are down 60%, while PLTK shares are up 11% over the same period.
On February 24, Playtika Holding announced that its management team has begun the process of estimating the company’s value potential strategic alternatives to maximize shareholder value. As part of the exploration process, the board plans to consider a large number of strategic alternatives, including a sale of the business or other possible transactions. Shares of the company added 17% in after-hours trading following the announcement. Playtika CEO Robert Antokol said: “The objective of the strategic review process we are announcing today is to ensure that we are taking all possible steps to maximize value for our shareholders..”
Recent quarterly performance and analyst estimates
Skillz Inc. recently announced its results for its fourth quarter of 2021, sending its shares down more than 29% on the lower-than-expected report and weak 2022 guidance. In the fourth quarter, the company’s total revenue rose 60.7% year-on-year to 108, $85 million, missing the Wall Street consensus of $5.2 million. The company’s net loss was $99 million, a 48% increase from the fourth quarter of 2020. As a result, Skillz disclosed GAAP EPS of $0.25, missing analyst consensus of $0.10.
Skillz paid monthly active users grew 56% year-over-year to 0.61 million. Additionally, its average revenue per paid user increased 3% year over year to $59.
As for Skillz advice, the company expects 2022 revenue to be $400 million. For the first trimester, Wall Street expects Skillz EPS to decelerate 13.33% year-over-year to ($0.17). Its revenue is expected to rise moderately by 6.41% year-on-year to $89.04 million in the first quarter.
On February 24, Playtika announced its results for the fourth quarter of 2021. Playtika’s revenue rose 13.2% year over year to $649.0 million, beating Wall Street revenue estimates of $7.15 million. Additionally, revenue growth was primarily driven by a 31.5% year-over-year increase in revenue from the occasional wallet segment, which accounted for 51.8% of total revenue. PLTK’s net profit was $102.3 million, up 34.6% year-on-year. As a result, PLTK’s GAAP EPS came in at $0.25, beating analyst consensus of $0.07.
The company’s daily paid user count was 311,000 in the fourth quarter, representing a 14% year-over-year growth. Additionally, the average revenue per daily active user increased 15% year-on-year to $0.68.
For the next quarter, analysts expect Playtikas EPS to be $0.23, representing a 155.11% year-over-year increase. Additionally, analysts expect PLTK’s first-quarter revenue to grow 6.66% year-on-year to $681.45 million.
Options Market Sentiment Comparison
Looking at the May 20, 2022 options channel for SKLZ and PLTK, we can determine the sentiment of the options market by comparing the call/put ratio. In the case of SKLZ, the ratio of open calls to open puts at the $5.00 strike price is 1.05x, implying neutral option market sentiment. As for PLTK, the open calls to open sells ratio at the strike price of $20.00 is 1.61x, which shows bullish market sentiment.
In my opinion, Playtika is the big winner at the moment. Playtika’s management intends to increase shareholder value through strategic alternatives that could act as a strong growth catalyst for its stock. Additionally, Playtika released a relatively better fourth quarter report, while its forward growth rates also look higher.
Shares of SKLZ rose $0.04 (+1.35%) in premarket trading on Wednesday. Year-to-date, SKLZ is down -59.54%, compared to a -9.10% rise in the benchmark S&P 500 over the same period.
About the Author: Oleksandr Pylypenko
Oleksandr Pylypenko has more than 5 years of experience as a financial analyst and financial journalist. Previously, he was a contributing editor to Seeking Alpha, Talks Market and Market Realist.
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