Skillz Inc. (NYSE:SKLZ) Just Reported And Analysts Have Been Cutting Their Estimates

It's shaping up to be a tough period for Skillz Inc. (NYSE:SKLZ), which a week ago released some disappointing annual results that could have a notable impact on how the market views the stock. Revenues missed expectations somewhat, coming in at US$95m and leading to a corresponding blowout in statutory losses. The loss per share was US$2.70, some 13% larger than the analysts forecast. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Skillz after the latest results.

See our latest analysis for Skillz

Following the recent earnings report, the consensus from three analysts covering Skillz is for revenues of US$87.4m in 2025. This implies a definite 8.5% decline in revenue compared to the last 12 months. Losses are forecast to balloon 87% to US$5.06 per share. Yet prior to the latest earnings, the analysts had been forecasting revenues of US$106.0m and losses of US$3.75 per share in 2025. There's been a definite change in sentiment in this update, with the analysts administering a notable cut to next year's revenue estimates, while at the same time increasing their loss per share forecasts.

The average price target lifted 7.9% to US$10.25, clearly signalling that the weaker revenue and EPS outlook are not expected to weigh on the stock over the longer term. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. The most optimistic Skillz analyst has a price target of US$15.00 per share, while the most pessimistic values it at US$5.50. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. We would also point out that the forecast 8.5% annualised revenue decline to the end of 2025 is roughly in line with the historical trend, which saw revenues shrink 8.0% annually over the past five years Compare this against analyst estimates for companies in the broader industry, which suggest that revenues (in aggregate) are expected to grow 9.7% annually. So while a broad number of companies are forecast to grow, unfortunately Skillz is expected to see its revenue affected worse than other companies in the industry.

The Bottom Line

The most important thing to note is the forecast of increased losses next year, suggesting all may not be well at Skillz. Unfortunately, they also downgraded their revenue estimates, and our data indicates underperformance compared to the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.

With that in mind, we wouldn't be too quick to come to a conclusion on Skillz. Long-term earnings power is much more important than next year's profits. We have forecasts for Skillz going out to 2027, and you can see them free on our platform here.

However, before you get too enthused, we've discovered 4 warning signs for Skillz (1 can't be ignored!) that you should be aware of.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.