General
December 19, 2020
5 minutes read

Morgan Stanley Bets Big On Skillz

Morgan Stanley, the well-known investment bank and financial services firm, is betting big on Skillz, a mobile gaming company that…

Morgan Stanley, the well-known investment bank and financial services firm, is betting big on Skillz, a mobile gaming company that recently debuted on the public markets by the way of a reverse merger with a blank-check firm.

On the 9th of December, 2020, just a few days before Skillz completed its merger with the blank-check firm Flying Eagle Acquisition Corp, Morgan Stanley submitted a filing to the SEC that indicated it held an 18.8% stake in Flying Eagle.

With Skillz having completed its merger with Flying Eagle on Friday, Morgan Stanley’s stake in the blank-check firm has been converted into Skillz stock and made it a major investor in the mobile gaming company.

Skillz enjoyed a stellar debut that saw it soar high on its first day of trading. Now, the company trades at $20.92 per share with a market cap of over $7 billion.

It seems that Morgan Stanley has found something very attractive in Skillz and thus secured a large stake in the company ahead of its debut. Skillz is a platform that lets mobile gamers compete against each other, operating in an industry that’s already big yet still poised for significant growth in the coming years.

Skillz has a healthy business that churned out $162.4 million in revenue in the first nine months of this year, up 91% compared to the past year. The company is, however, not profitable, posting a $78.5 million loss in the same nine-month period compared to a loss $14.9 million in the same period of the previous year.

A buy-in from Morgan Stanley could serve as a major stamp of approval for other investors to place bets on Skillz and elevate the company’s status. As to all investments, however, risks abound, given Skillz’s current market cap of over $7 billion represents an unusually high multiple to its projected 2020 revenues of $225 million.

For Morgan Stanley, it seems to have performed its due diligence and singled out Skillz as a company to bet big on, now with a significant stake in the company that makes it one of its largest shareholders.

Photo: Morgan Stanley CEO James Gorman by World Economic Forum is licensed under CC BY-NC-SA 2.0