U - Unity Software: 2024 Will Be A Show-Me Year (Rating Downgrade)

2024-02-12 09:15:27 ET

Summary

• I am skeptical about Unity Software's ability to achieve the touted $1 billion EBITDA in 2024, prompting a revision to a sell rating.
• Unity, currently navigating a "show-me" narrative, faces immediate challenges, including a product portfolio assessment and potential workforce reductions.
• Unity's valuation as a growth stock, coupled with significant debt, raises doubts about reaching the EBITDA target, making the stock less appealing.

Investment Thesis

Unity Software ( U ) will report its Q4 2023 results on Monday, February 26th after the close. This is a business that I assert has now been put down as a "show-me" story....

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