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Skillz Sinks on Secondary Offering of 32 Million Shares

Skillz will be offering 17 million shares with existing stockholders selling 15 million shares.
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Shares of mobile game platform Skillz Inc.  (SKLZ) - Get Skillz Inc. Class A Report were falling sharply Wednesday after the company announced a secondary offering of 32 million class A shares.

The offering will consist of 17 million shares being offered by Skillz and 15 million shares by selling stockholders. 

Citigroup, Goldman Sachs and Jefferies, who are acting as underwriters for the offering, will each be granted a 30-day option to purchase up to an additional 4.8 million shares. 

Skillz intends to use the proceeds from the sale for working capital and general corporate purposes. Skillz won't receive any proceeds from the sale of stock being offered by shareholders. 

Shares of Skillz were falling 11.9% to $27.05 on Wednesday morning.

Last week, Skillz shares also slid, touching their lowest levels since January, after Wolfpack Research tweeted that it is shorting the company's stock. 

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Wolfpack, a short-selling research firm, called Skillz in its research report "another SPAC preying on retail investors by obtaining a ridiculous valuation for the SPAC merger based on self-serving projections."

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The firm is short Skillz because its top games "appear to be stagnant to declining, leading us to believe its revenue projections are farcical," the company said.

According to Wolfpack, Skillz's top three games, which represent 88% of its revenues, had already plateaued by the third quarter of 2020.

"While SKLZ may very well eke out its numbers for Q4 2020, concerned investors should be seeking answers regarding Q1 2021 guidance on Wednesday’s earnings call," the research report said.

Last month, Skillz shares soared after the mobile-gaming company said it was joining with the National Football League to host a challenge to develop an NFL-themed mobile game.