U - Unity: Turnaround Will Take Time

2024-04-10 11:07:25 ET

Summary

• Unity's game engine provides it with a solid competitive position and a large and growing opportunity. The company has made strategic missteps and executed poorly in recent years though.
• Unity's poor performance relative to AppLovin raises concerns about its Grow business and the value of the ironSource acquisition.
• There is a significant potential downside if the Grow business continues to struggle, particularly if expected margin gains are not realized.
• The share price could increase significantly if Unity can improve its monetization solutions and reignite growth in its Grow business.

I have long supported Unity ( U ) due to the growing importance of game engines and the technical difficulty of creating a cutting edge game engine. Unity's engine is currently monetized primarily through advertising though, and this is an area in which Unity has been left trailing its competitors. While Unity is investing to change this, it is not currently clear how successful the company will be....

For further details see: