Monday, October 3, 2022

Skillz Stock Rallies on UFC Gaming Deal

Mobile games developer Skillz Inc. (NYSE:SKLZ) is rallying Wednesday. That’s after the company revealed a multi-year partnership with the UFC — the dominant mixed martial arts (MMA) association.

News of the agreement is fueling a rally in Skillz stock, with the shares higher by almost 9% in midday trading. The previously downtrodden name entered today with a 47%  gain of just the past week.

Financial terms of the deal with UFC weren’t revealed. But given the popularity of the MMA series, investors clearly view it as a win for Skillz.

The deal allows selected game creators from Skillz developer community to utilize certain UFC and UFC athlete intellectual property for mobile game creation and marketing. The new UFC-branded mobile games are slated to launch in 2023,” according to a statement.

Under the terms of the licensing deal, Skillz developers will be able to create UFC-themed competitive mobile games that are co-marketed by UFC and Skillz.

UFC Pact Similar to Another Skillz Deal

The Skillz agreement is similar to one the gaming company reached with the NFL 13 months ago.

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.

For UFC, which is one of the fastest-growing sports associations in the world, the partnership with Skillz is an avenue for fan engagement and a practical one at that, because as UFC Senior Vice President of Global Consumer Products Tracey Bleczinski points out, many of the sport’s fans are also avid gamers.

The combination makes sense, because there are more than 2.7 billion active mobile gamers and 10 million developers around the world.

UFC has more than 625 million fans and 188 million media followers, according to the statement.

Skillz Model

San Francisco-based Skillz offers gamers a different model than other pay sites, particularly in the esports niche.

Skillz matches competitors based on acumen, ensuring a gamer new to the platform isn’t going up against an experienced, highly skilled rival.

The company estimates the mobile gaming market will more than double in value to $150 billion by 2025. This far exceeds even the highest estimates for US internet casinos and sports betting.

The stock, which has long been a favored target of short sellers, is off 55% year-to-date. But if it can jump another 8.59% to reclaim its 50-day moving average, more upside from there is possible.

Al Rossi Sports Investments

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