U - Unity's Bottom Looks Attractive For Opportunistic Investors

2024-04-01 09:00:00 ET

Summary

• The boycott has triggered a notable slowdown in U's new contract signings and renewals, as observed in the moderating dollar-based net expansion rate.
• It is unsurprising that the new management has embarked on a strategic business reset to drive top/bottom line growth while laying off -25% of its headcount.
• This is on top of the new opportunities in advertising, XR headsets, and industrial applications in the automotive platform.
• Assuming that the reset is successful and departed developers return, it appears that there may be great upside potential to our bullish PT of $51.60.
• It goes without saying that anyone who chooses to add here must also be comfortable with moderate volatility due to the stock's elevated short interest of 12.87%.

We previously covered Unity Software Inc. ( U ) in January 2024, discussing the impacted Create Solutions revenue, with the boycott triggering a notable slowdown in its new contract signings and renewals. The ongoing conflict in Israel had also affected a significant portion of its Grow Solutions, naturally triggering the miss in its top line in FQ3'23....

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