Pomerantz law firm reminds shareholders
NEW YORK, June 24, 2021 (GLOBE NEWSWIRE) – Pomerantz LLP announces that a class action lawsuit has been filed against Skillz, Inc. f / k / a Flying Eagle Acquisition Corp. (“Skillz” or the “Company”) (NYSE: SKLZ) and certain of its officers. The class action suit, filed in the United States District Court for the Northern District of California, and registered as 21-cv-04662, is in the name of a group consisting of all persons and entities other than the defendants who have purchased or otherwise acquired Skillz securities between December 16, 2020 and April 19, 2021 inclusive (the “Class Period”). The plaintiff seeks recourse against Skillz and certain of the Company’s current senior executives under the Securities Exchange Act of 1934 (the “Exchange Act”) and rule 10b-5 enacted thereunder.
If you are a shareholder who purchased Skillz securities during the Class Claim Period, you have until July 7, 2021 to ask the court to appoint you as the primary claimant. A copy of the complaint can be obtained at www.pomerantzlaw.com. To discuss this action, contact Robert S. Willoughby at [email protected] or 888.476.6529 (or 888.4-POMLAW), toll free, Ext. 7980. Those inquiring by e-mail are encouraged to provide their mailing address, telephone number and the number of shares purchased.
[Click here for information about joining the class action]
Skillz is an internet technology company founded in 2012 and headquartered in San Francisco, California. Skillz provides a proprietary gaming platform for mobile game users and developers. It connects gamers around the world by hosting competitive paid eSports games on its platform. Skillz also provides an integrated “development console” to its game developer customers that enables them to quickly create, integrate and monitor the performance of their games on the Skillz platform. According to Skillz, its gaming platform “allows us to deliver gaming experiences that our gaming community trusts and loves, and which” level the playing field “for every developer. We believe that we are reinventing competitive mobile gaming and thereby expanding the mobile gaming market. Our technology platform aligns the interests of developers and gamers when it comes to monetizing users, instead of putting them at odds. Skillz’s income comes exclusively from taking a percentage of player entry fees into paid contests. In 2013, Skillz was banned from the Google Play Store. Android users need to know how to use Android Store or manually install games.
The complaint alleges that, throughout the Class Period, the Defendants disseminated false and misleading statements and omissions which materially misrepresented Skillz’s purported financial condition and prospects. These misleading statements and omissions included statements relating to certain Skillz business transactions, performance measurements and a final evaluation, including, among others, Skillz’s ability to attract new end users, future profitability, declining popularity of its hosted games, which represented 88% of its turnover and the valuation of the Company. For example, one of the company’s objectively unrealistic promises included the unsustainable claim that the company was valued at $ 3.5 billion, based on revenue projections above $ 550 million for 2022. However, the company has not informed investors that downloads of games which account for a majority share of its revenue have been declining since at least November 2020. In reality, the Company’s prospects for reaching this revenue scale were far from close. be realistic considering its size, market share, reliance on third-party app stores, declining downloads of its most popular games, and most importantly, the sheer amount of bonuses incentives that Skillz regularly offers its gamer clients, a fact that investors have been misled. These bonus payouts are routinely provided to its customers, who are supposed to use them for entry fees, which in turn artificially inflates Skillz’s income.
Skillz offers Bonus Cash in order to entice users and players to engage with their platform. However, Skillz’s disclosure is materially incomplete as it does not reveal that Bonus Cash boomerangs are returning to the income stream. Essentially, Skillz has the ability to offer millions of dollars in bonus cash and simultaneously report millions of dollars in income. Had this hidden information been disclosed frankly, investors would have had a darker picture of the Company’s growth potential.
Skillz’s bullish market statement misled investors into believing the company was well positioned for rapid long-term growth. As a research analyst later described the outcome of Skillz’s strategy, “[i]It’s just a nice little piece of ice in the water until you hit it and find it’s an iceberg.
This iceberg hit investors just four months after the publication of Skillz. On March 8, 2021, Wolfpack Research released a report titled “SKLZ: It Takes Little Skill to see this SPACtacular Disaster Coming” (the “Wolfpack Report”). The Wolfpack Report alleges that the growth speculations that Skillz and his insiders had touted were “utterly unrealistic.” The Wolfpack report alleges that Skillz’s top three games, accounting for 88% of Skillz’s revenue, have reported a drop in downloads since the third quarter of 2020. It states that three games Skillz relies on for 88% of its revenue , produced by two developers, Tether Studios and Big Run Studios, had started to decline before Skillz went public. Downloads for these games all declined by 52% (21 Blitz), 40% (Soliatare Cube) and 20% (Blackout Bingo) in Q4 2020. The Wolfpack report concluded that Skillz buried this drop in downloads and revenue. in its disclosures while continuing to tout massive future revenue growth.
The Wolfpack report also reveals that Skillz is not taken seriously by industry experts because Skillz’s platform is not robust enough to handle synchronous play and international matchmaking. Skillz is also banned from the Google Play Store, a major channel for game developers. The Wolfpack report also shows that Skillz has a habit of bragging about future partnerships that don’t have huge value, or never amount to anything. Finally, the Wolfpack report alleges that CEO Paradise is not as experienced as Skillz claims and has in fact been involved in several failed companies.
On the release of the Wolfpack report, Skillz stock fell 10.9% to close at $ 24.45, down $ 3 from the previous day. This decline represented a loss in market value of nearly $ 762 million.
Shortly thereafter, on March 15, 2021, a Twitter user known as “@Restrinct” published a report highlighting the problems with Skillz’s unsustainable business model, unrealistic growth projections and huge spending. sales and marketing.
Finally, on April 19, 2021, Eagle Eye Research published an anonymous report on Twitter in which it claimed that by offering users incentives, “the company is likely recognizing substantial non-cash income, and  cash income may be less than half of GAAP income ”. On this news, SKLZ shares fell 6.61% to close at $ 14.11 (a decrease of $ 1 from the previous day) on April 19, 2021 and shares fell further the next day to hit an all-time low. of $ 12.55. The decline represented a $ 254 million loss in value to investors.
Pomerantz, with offices in New York, Chicago, Los Angeles and Paris, is recognized as one of the leading firms in the areas of corporate law, securities and antitrust litigation. Founded by the late Abraham L. Pomerantz, known as the Dean of the Class Actions Bar, Pomerantz was a pioneer in the field of securities class actions. Today, more than 80 years later, Pomerantz continues the tradition it established, fighting for the rights of victims of securities fraud, breach of fiduciary duty and professional misconduct. The firm has recovered numerous multi-million dollar damages on behalf of the members of the group. See www.pomerantzlaw.com
Robert S. Willoughby
888-476-6529 ext 7980