Like other speculative growth stocks, Skillz (NYSE:SKLZ) continues to struggle. The days of “growth at any price” have long since passed. With the Federal Reserve raising rates, SKLZ stock continues to head lower.

While it’s much cheaper now (it once traded for prices more than ten times what it trades for today), it’s still not exactly cheap.

Shares in the company, which operates a mobile gaming platform that hosts real money competitions among players, still trade at a valuation premium to more established names in the mobile gaming space.

SKLZ stock may drop more from here. Even as it has tanked 44.6% in the past month alone, due to last month’s rate hike selloff. Concerns still run high as well that its business model is not sustainable. It won’t be until next month (when it next reports earnings) that we’ll know whether its current game plan to grow revenue while lowering customer acquisition costs is starting to pay off.

Nevertheless, you may want to take a closer look at it. This moonshot’s risk/return proposition may make it worthwhile.

SKLZ Stock and Its Move to Penny Stock Levels

Now at around $4 per share, Skillz is officially a penny stock. This is very similar to the situation with other former darlings, like Clover Health (NASDAQ:CLOV) and ContextLogic (NASDAQ:WISH). Both names have also seen big declines, due to a combination of changes in the market, plus issues with their respective underlying performance.

In the case of SKLZ stock, you may recall it was flying high 12 months back. At the time, trading for above $40 per share, excitement over its growth potential, and Cathie Wood’s seal of approval helped to outweigh concerns like high unprofitability. A market favorable to “growth at any price” was also on its side.

Now? “Risk off” is the market’s new mantra. With interest rates rising, its lofty valuation has been pushed to a more rational level. Investors are more worried that its business model is unsustainable, rather than excited about its potential to scale into a multi-billion dollar business. To make matters worse, Cathie Wood has proven to be a fair-weather friend of Skillz stock. Exchange-traded funds (ETFs) managed by her firm ARK Invest reduced their positions in Skillz.

Put simply, it appears to be a bad situation that’s getting worse. Yet take into account the in-progress improvements it is making to its growth strategy. With its share price so low, the upside potential may be starting to outweigh the risk.

What Makes This a Worthwhile Moonshot

Trading for 4.2x projected 2021 sales, SKLZ stock still trades at a premium to other mobile gaming plays. For instance, Zynga (NASDAQ:ZNGA). Even with its shares zooming higher on news of Take-Two Interactive (NASDAQ:TTWO) acquiring it, the established, profitable mobile gaming company still trades at a lower price-to-sales (P/S) ratio (3.7x). Playtika (NASDAQ:PLTK), another publicly traded mobile gaming play, trades for just 2.7x projected 2021 sales.

The takeaway? It may have room to fall. Investors continuing to lose faith in its turnaround strategy, plus further multiple compression due to rising interest rates and its higher-than-average valuation are all reasons to worry. Yet it’s not set in stone that Skillz will continue to disappoint.

Management is well aware that its past strategy, which leaned heavily on ad-spending to attract new users, isn’t viable in the long term. That’s why the company has re-shifted focus to having higher quality games on its platform. For example, as my InvestorPlace colleague Muslim Farooque discussed last month, Skillz plans to launch NFL-branded games. More appealing games will enable it to retain active users.

Alongside this, through its purchase of mobile ad platform Aarki, the company can develop another revenue stream for its platform. By improving both monetization and user retention, it can continue to grow sales, while getting marketing costs under control. It may take more than a quarter or two for this to start playing out. But with the $540.3 million that were in its coffers as of Sept. 30, plus the $300 million raised from its December senior notes offering, it has plenty of cash on hand to ride things out until its strategy (possibly) starts to pay off.

Bottom Line on Skillz

In short, my view on Skillz today is much like my current view on Clover Health. There’s no guarantee that either stock, struggling due to company-specific issues, plus a market less favorable to them, will see their respective fortunes improve.

Yet if you spread your bets widely across these types of plays? In the aggregate, a few wins could make up for the rest that fail to bounce back.

As it trades at penny stock levels, investors on the prowl for risky plays should consider SKLZ stock.

On the date of publication, Thomas Niel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Thomas Niel, a contributor for InvestorPlace.com, has been writing single-stock analysis for web-based publications since 2016.