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Unity stocks – upwards, downwards and sideways: What's next?
Unity Software Inc., which is more known as Unity Technologies, is a company that focuses on software development of video games. Founded in 2004, the original name used by the company was Over the Edge Entertainment but was later changed to Unity in
Unity had gone public in September 2020, with an IPO price of $52. This price did not even last a that as the stock was well accepted by investors. It continued to climb until it hit the all-time high of $172.29 on December, which shows unprecedented growth in just a few months. The momentum was then reversed after Q4 earnings report came in February of 2021, which showed steep losses.
The revenue increased by 43% year-over-year to $772 million, but the operating loss was also recorded to be $275 million. The loss was generated though non-cash charges when the company went public and a part of the stock was allocated to charity. If we are to remove this from the equation, the company actually generated $20 million from their operations.
The earnings report showed that Unity is currently unprofitable, causing the stock price to pull back down to below $100 a share, and continued to trade sideways for a couple of weeks. The stock then experienced another drop after the 2021 Q1 reports came in with Unity reporting a revenue of $234.8 million which was 41% higher year-over-year.
The drop was related to the broader market experiencing a pull back, causing the stock to drop down to $80, which was 50% down from its peak value, causing investors to focus back on the stocks. The information about the company was re-evaluated by analysts, and after traders digested the details, the stock was back on its upward trend.
Although the value of the stock is still currently around $111, the guidance for the company was adjusted from $950 million to $1 billion, showing the company's confidence with their upcoming performance. Hence, many analysts remain bullish about the Unity stock as more and more avenues are being opened for the application of the platform.
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