U - Unity Software: Painful Turnaround

2024-07-05 02:21:56 ET

Summary

• Unity Software looks set to re-test the all-time lows of $15.23 set following weak Q1 numbers.
• The new CEO, Matthew Bromberg, from Electronic Arts, has yet to outline turnaround plans, setting some risk of a change in plans.
• U stock is relatively cheap at 4x sales, but the business has to return to solid growth to warrant a higher valuation multiple.

Anytime a stock continues to hit new lows, an investor has to tread cautiously. Unity Software Inc. ( U ) recently traded at all-time lows following another weak quarter in Q1, and the stock appears headed for a test of the $15.23 low on June 21. My investment thesis remains Neutral on the stock, with the new CEO only starting on May 15 due to the potential kitchen sink type quarter coming up....

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