S&P 500   5,061.82
DOW   37,735.11
QQQ   431.06
5 Small-Cap Energy Stocks Surged in Price and Volume on Friday
Novo Nordisk Arms Wegovy to Be a Triple Threat
Vital Farms Rides the Pasture-Raised Egg Trend to the Bank
3 Energy Plays for Cash Flow: Buy 1 or Buy Them All
M&T Bank, Goldman Sachs rise; Salesforce, Tesla fall, Monday, 4/15/2024
When Will the Next Bull Market Be?
Global smartphone shipments climb nearly 8% in 1st quarter as Samsung retakes the lead
S&P 500   5,061.82
DOW   37,735.11
QQQ   431.06
5 Small-Cap Energy Stocks Surged in Price and Volume on Friday
Novo Nordisk Arms Wegovy to Be a Triple Threat
Vital Farms Rides the Pasture-Raised Egg Trend to the Bank
3 Energy Plays for Cash Flow: Buy 1 or Buy Them All
M&T Bank, Goldman Sachs rise; Salesforce, Tesla fall, Monday, 4/15/2024
When Will the Next Bull Market Be?
Global smartphone shipments climb nearly 8% in 1st quarter as Samsung retakes the lead
S&P 500   5,061.82
DOW   37,735.11
QQQ   431.06
5 Small-Cap Energy Stocks Surged in Price and Volume on Friday
Novo Nordisk Arms Wegovy to Be a Triple Threat
Vital Farms Rides the Pasture-Raised Egg Trend to the Bank
3 Energy Plays for Cash Flow: Buy 1 or Buy Them All
M&T Bank, Goldman Sachs rise; Salesforce, Tesla fall, Monday, 4/15/2024
When Will the Next Bull Market Be?
Global smartphone shipments climb nearly 8% in 1st quarter as Samsung retakes the lead
S&P 500   5,061.82
DOW   37,735.11
QQQ   431.06
5 Small-Cap Energy Stocks Surged in Price and Volume on Friday
Novo Nordisk Arms Wegovy to Be a Triple Threat
Vital Farms Rides the Pasture-Raised Egg Trend to the Bank
3 Energy Plays for Cash Flow: Buy 1 or Buy Them All
M&T Bank, Goldman Sachs rise; Salesforce, Tesla fall, Monday, 4/15/2024
When Will the Next Bull Market Be?
Global smartphone shipments climb nearly 8% in 1st quarter as Samsung retakes the lead

Unity Software is the Other Video Game Engine To Watch

Unity Software stock creationVideo game engine creator Unity Software NYSE: U stock has joined Chinese electric vehicle (EV) maker XPeng NASDAQ: XPENG and artificial intelligence (AI) powered lending platform Upstart Holdings NASDAQ: UPST in the 80% club. These are stocks that have fallen -80% or more from their highs. The company provides an interactive real-time 3D content platform for developers to design, create, operate, and monetize 2D and 3D content. Nearly half of all the world’s video games, including those produced by major publishers Electronic Arts NYSE: EA and Take-Two Interactive (NASDAQ: TTWO)are created with the Unity 3D engine. It competes with privately owned Unreal Engine.

Outside of gaming, creators from architects, filmmakers and automotive designers including Mercedes Benz OTCMKTS: MBGYY use the Unity engine. Next-gen consoles like Sony PlayStation 5 NYSE: SNE and Microsoft Xbox One (NASDAQ: MSFT) are utilizing ever more complex 3D content to push gaming to new levels. 

AppLovin Merger Proposal Shot Down

Key Points

  • Nearly 50% of the world’s video games were developed on the Unity engine.
  • Unity is rapidly growing its business outside of gaming to 40% of create solutions revenues, up from 25% a year ago.
  • Shares are down (-80%) from its highs of $210 in November 2021.
  • The downturn in video gaming has added selling pressure to Unity stock but Roblox’s surprise September metrics improvement may signal a reversal.
  • 5 stocks we like better than Unity Software

On August 15, 2022, Unity rejected a $20 billion all-stock merger proposal from AppLovin NYSE: APP for around $58.85 per share. The board of directors determined that a merger with AppLovin would not be superior to its acquisition of ironSource software, an app monetization technology platform. It decided to move forward with the acquisition of ironSource for $4.4 billion to close in Q4 2022 in the best interest of its shareholders. This started the downward spiral from a high of $58.63 to a 10-week sell-off to a lows of $27.60 on October 21, 2022. However, the decision was lauded by Needham’s analyst Bernie McTernan. The acquisition prepares Unity to accommodate diversified demand for content creation while hedging itself against lower consumer spending and tougher competition in the monetization industry.


Roblox Reversal of Fortune

Just as it seemed the video gaming segment was falling off a cliff with various warnings, including GPU maker Nvidia NASDAQ: NVDA and Roblox NASDAQ: RBLX reporting much improved September 2022 metrics that shot its shares up 18%. Its daily average users (DAU) rose 23% to 57.8 million. Total hours engaged rose 16% year-over-year (YOY) to $4 billion. Estimated bookings rose 11% and were between $212 million to $219 million. Estimated average bookings per daily active user were between $3.67 to $3.79. Estimated revenues were between $171 million to $180 million. Foreign currency fluctuations led to a reduction of 6% in YOY growth rate in September bookings.

Setting the Bar Lower

On August 9, 2022, Unity released its fiscal results for the quarter ending June 2022. The company reported an earnings per share (EPS) loss of $0.18, beating analyst estimates for -$0.21 by $0.03. Revenues grew 8.6% YOY to $297 million, missing $299.05 million consensus analyst estimates. The company grew its $100,000 clients to 1,085 from 888 in the same year-ago period. Unity partnered with Microsoft select Azure as its cloud partner build real-time 3D experienced from the Unity engine. 

Lowering the Bar

Unity issued downside guidance for its Q3 2022 revenues to come in between $315 million to $335 million versus $346.25 million consensus analyst estimates with non-GAAP operating margin between (-10%) to (-16%). For full-year 2022, Unity expects revenues to range from $1.30 billion to $1.35 billion versus $1.36 billion consensus analyst estimates.

Unity Software is the Other Video Game Engine To Watch

 

Should you invest $1,000 in Unity Software right now?

Before you consider Unity Software, you'll want to hear this.

MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and Unity Software wasn't on the list.

While Unity Software currently has a "Hold" rating among analysts, top-rated analysts believe these five stocks are better buys.

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Companies Mentioned in This Article

CompanyMarketRank™Current PricePrice ChangeDividend YieldP/E RatioConsensus RatingConsensus Price Target
Unity Software (U)
3.1069 of 5 stars
$24.41-3.6%N/A-11.30Hold$37.03
XPeng (XPEV)
2.3318 of 5 stars
$7.20-3.6%N/A-4.28Hold$17.48
Upstart (UPST)
2.4829 of 5 stars
$21.94-7.9%N/A-7.57Reduce$26.00
Mercedes-Benz Group (MBGYY)
0 of 5 stars
C$20.05+0.9%N/AN/AHoldN/A
Roblox (RBLX)
3.6388 of 5 stars
$36.68-4.4%N/A-19.61Moderate Buy$46.25
Electronic Arts (EA)
3.7072 of 5 stars
$127.05-0.7%0.60%32.00Moderate Buy$147.00
Take-Two Interactive Software (TTWO)
4.5005 of 5 stars
$145.30-1.3%N/A-16.93Moderate Buy$176.39
Sony (SNE)
0 of 5 stars
$83.99-0.1%0.49%12.03N/A
Microsoft (MSFT)
4.5951 of 5 stars
$413.64-2.0%0.73%37.40Moderate Buy$430.52
NVIDIA (NVDA)
4.6666 of 5 stars
$860.01-2.5%0.02%72.03Moderate Buy$926.30
Compare These Stocks  Add These Stocks to My Watchlist 

Jea Yu

About Jea Yu

  • JeaYu21@gmail.com

Contributing Author

Trading Strategies

Experience

Jea Yu has been a contributing writer for MarketBeat since 2018.

Areas of Expertise

Equities, options, ETFs and futures; fundamental, qualitative, quantitative and technical analysis and pattern identification; active and swing trading; trading systems and methodology development

Education

Bachelor of Arts, University of Maryland, College Park

Past Experience

U.S. equity markets trader, writer and analyst for over 25 years. Published four books by publishers McGraw-Hill, John Wiley & Sons, Marketplace Books and Bloomberg Press. Speaker at various expos and seminars and has been quoted and featured in USA Today, The Wall Street Journal, Traders Magazine, The Financial Times and various trade publications, including Stocks & Commodities, Active Trader and Online Investor.


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