U - Unity: Catching A Falling Knife Could Hurt Badly (Downgrade)
2024-07-03 13:35:33 ET
Summary
- Unity Software Inc. investors have endured another hammering since Unity's Q1 earnings release in May.
- The company is facing intense competition with AppLovin and might not be winning.
- Unity aims for revenue growth acceleration in the second half but faces challenges in non-core businesses and ad monetization.
- Uncertainties linked to Unity's new direction under a new CEO and ad monetization uncertainties could hamper a further recovery.
- I argue why I can no longer maintain a bullish rating on Unity stock.
Unity Stock: Underperformance Is Justified
Unity Software Inc. ( U ) investors have endured a massive hammering since Unity's Q1 earnings release in May 2024. Therefore, the market seems to have assessed significant execution risks as ex-interim CEO Jim Whitehurst handed over the reins to new CEO Matthew Bromberg . Bromberg is a highly experienced gaming industry veteran, underscoring Unity's refocus on capitalizing on gaming opportunities. Whitehurst has transitioned to Unity's executive chair, providing continuity in the company's strategic direction. Given Unity's struggles to reignite growth, its ability to improve its ad monetization model is still expected to come under intense scrutiny....
Unity: Catching A Falling Knife Could Hurt Badly (Downgrade)