What Happened?
Shares of mobile game developer Skillz (NYSE: SKLZ) fell 12.7% in the afternoon session after the company disclosed a partnership dispute with developer Tether Studios LLC.
Tether notified Skillz of its intent to terminate all agreements, which involved revenue sharing from user entry fees on popular Tether-developed games like Solitaire Cube and 21 Blitz. In response, Skillz filed a lawsuit, asserting that the termination notice is “invalid and in breach of Tether's obligations.” While certain agreements prevent the removal of the two key games from Skillz's platform for 18 months post-termination, the company acknowledged the uncertainties of litigation. This legal battle introduces instability and potential risk to the company's revenue streams, weighing heavily on investor sentiment.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy Skillz? Access our full analysis report here, it’s free.
What Is The Market Telling Us
Skillz’s shares are extremely volatile and have had 43 moves greater than 5% over the last year. But moves this big are rare even for Skillz and indicate this news significantly impacted the market’s perception of the business.
The previous big move we wrote about was 15 days ago when the stock dropped 4.3% on the news that investor apprehension intensified ahead of a key policy speech and perplexing inflation signals clouded the economic outlook, leading to a wider market retreat from growth-oriented stocks.
The downturn in the market was largely attributed to a significant sell-off in megacap tech and chipmaker shares. Nvidia, Advanced Micro Devices (AMD), and Broadcom all saw notable drops, dragging down the VanEck Semiconductor ETF. Other major tech-related companies like Tesla, Meta Platforms, and Netflix were also under pressure. A key reason for this trend is that much of the recent market gains have been concentrated in the "AI trade," which includes these large technology and semiconductor companies. So this could also mean that some investors are locking in some gains ahead of more definitive feedback from the Fed.
Skillz is up 42.6% since the beginning of the year, but at $7.60 per share, it is still trading 16.4% below its 52-week high of $9.09 from August 2025. Investors who bought $1,000 worth of Skillz’s shares 5 years ago would now be looking at an investment worth $28.92.
Do you want to know what moves the business you care about? Add them to your StockStory watchlist and every time a stock significantly moves, we provide you with a timely explanation straight to your inbox. It’s free and will only take you a second.
