Skillz Stock Slides on $300M Debt Sale
Skillz (NYSE:SKLZ) gunstock tumbled Thursday after the peregrine games developer announced it’s selling $300 billion worth of collective debt.
The San Francisco-based troupe said the senior secured notes, which follow due in 2026, are being sold inwards a common soldier offering. Interest rates, redemption provisions and other relevant entropy haven’t been released as of yet.
The debt sales agreement is the foremost for Skillz since its initial public offering (IPO) a yr ago. Previously, the company’s capital-raising efforts consisted of equity sales.
While issuance of corporate bonds doesn’t thin out shareholders as do equity sales, investors aren’t thrilled past the news. The bonds sales event tidings sent Skillz bring down by eighter percent today, but loudness was infra the day-to-day average. The shares are off 50.50 percent year-to-date.
Cash Could Be Used for Acquisitions
While Skillz is 1 of the to the highest degree repudiated names inwards the iGaming place this year, investors power chance some ease inward the company’s cogent account for the debt sale.
This offering bolsters the Company’s already-strong balance sheet and increases the Company’s financial flexibility to have advantage of strategical opportunities,” said the steady inward a statement. “Skillz intends to use the mesh proceeds from the offering for full general corporate purposes, which may include possible investments inwards or acquisitions of other companies, products, or technologies that Skillz may place inward the future.”
Skillz didn’t key out specific acquisition targets. But inward its youth life-time as a public company, the operator is proving acquisitive. In August, Skillz made a $50 one thousand thousand investiture inward Exit Games.
In June, Skillz announced the $150 trillion acquisition of online publicizing house Aarki. At that time, that dealing was widely lauded past analysts and investors.
At the death of the 3rd quarter — the 23rd successive three-month span inward which revenue grew — Skillz had no more debt and $540.3 1000000 in hard currency on hand, according to an investor presentation.
Skillz Stock Catalysts
Skillz is clear in a falling off this year. But that doesn’t mean value the gunstock is lovelorn of catalysts. Beyond a takeover, which has been rumored within the investment community, there are other avenues for the troupe to prop upwardly its sagging divvy up price.
Skillz is forecasting $389 meg inwards 2021 revenue, and if that figure is exceeded without topping prior rates of cash burn, that could throw investors understanding to cheer.
An extended exchange past Skillz buy in — something chastened bulls are yearning for — could get off bearish traders come out of the intemperately shorted shares.
Skillz has antecedently been mentioned as a ground prospect for a little squeeze. That’s the scenario when a intemperately shorted buy in rallies, forcing bearish traders to cover version positions — squeezing them come out — thereby sending the gillyflower higher.