Shares of Skillz (SKLZ) jumped almost 27% after the company agreed to acquire Aarki, a technology-driven marketing platform, for a cash and stock deal valued at $150 million. Skillz is an online mobile gaming platform that is integrated into several iOS and Android games.
The deal is likely to close in the third quarter of 2021, subject to customary closing conditions.
Aarki uses its strengths in creative optimization, machine learning algorithms, and proprietary data to boost return on investment for performance advertisers. The addition of Aarki’s machine learning algorithms and advanced advertising capabilities will help Skillz to expand its presence in the mobile gaming industry.
Skillz CEO Andrew Paradise said, “Aarki’s proven machine learning will pair with Skillz’s robust first-party data to create an unrivaled value proposition for game developers.”
Paradise further added, “The integrated ecosystem will unlock new points of connectivity between consumers, developers, and brands, pairing the right impression with the right user at the right time, all while delivering a superior user experience.” (See Skillz stock analysis on TipRanks)
Following the deal announcement, Wedbush analyst Michael Pachter maintained a Buy rating and a price target of $34 (57.8% upside potential).
Pachter said, “The Aarki deal brings Skillz a compelling DSP, with Chartboost offering demand-side, mediation, and supplyside capabilities. It appears to us that Skillz’s deal is centered on UA optimization, while Zynga’s is aligned with its vision of creating its own advertising network.”
The rest of the Street is cautiously optimistic about the stock with a Moderate Buy consensus rating. That’s based on 4 Buys versus 2 Holds. The average analyst price target of $25.08 implies 16.4% upside potential to current levels. Shares have increased 29.2% over the past six months.
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