Unity Software: Credible Turnaround

Rafa F. Oliver, CFA
1.07K Followers

Summary

  • Unity Software's new management, led by CEO Matthew Bromberg, is focused on cost discipline, developer alignment, and a "fidelity for ubiquity" strategy to drive turnaround.
  • Despite a 17% revenue decline in 2024, positive free cash flow and strategic decisions have restored investor confidence, leading to a 23% stock price surge.
  • Bromberg's elimination of the controversial runtime fee and strategic hires like Jim Payne aim to revitalize Unity's Ad Tech business and enhance monetization.
  • Valued at $35.5 per share, Unity faces competition from AppLovin and risks related to developer trust but offers a promising long-term investment.

Game designers

Sladic/E+ via Getty Images

Overview

Unity Software (NYSE:U) has had problems during the last three years. The stock price has lowered 20% during the last 12 months (Figure 1). The reasons that explain those problems are a short-term oriented CEO, a fee structure

This article was written by

1.07K Followers
Investing in high-growth opportunities across industries, employing a value investing approach that prioritizes robust business models and strategic foresight. Focusing on companies with the potential to profoundly influence the global landscape in the years aheadI primarily employ the discounted cash flow (DCF) valuation methodology, although I remain adaptable to various valuation techniques. Additionally, I leverage business model frameworks derived from institutions like Harvard Business School and other renowned universities for in-depth analysis. This approach ensures a comprehensive understanding of a company's intrinsic value and strategic positioning within its industry landscape, facilitating informed investment decisions with a focus on long-term growth potential and risk mitigation.Educational background: MBA IESE Business School, University of Navarra and chartered financial analyst with CFA Institute

Analyst’s Disclosure:I/we have no stock, option or similar derivative position in any of the companies mentioned, but may initiate a beneficial Long position through a purchase of the stock, or the purchase of call options or similar derivatives in U over the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

Recommended For You

About U Stock

SymbolLast Price% Chg
Market Cap
PE
Yield
Rev Growth (YoY)
Short Interest
Prev. Close
Compare to Peers

More on U

Related Stocks

SymbolLast Price% Chg
U
--