Unity Software Is Being Refocused And May Be Set Up For A Merger (U)
Summary
Given the near-term challenges Unity faces I provide U a SELL recommendation with a price target of $23.24/share based on the expectations of a -10% revenue decline in FY24. The first order of business since taking the CEO helm has been a total evaluation of Unitys products and services and assessing their value to the firm. Though this isnt a new challenge faced by Unity, as Reuters reported the restrictions over two years ago, its impacts continue to ripple through the market as hours spent gaming become more scarcely competitive. Create Solutions experienced flat growth due to a decline in the consumption of hosting services by customers which was partially offset by an increase in revenue from subscription offerings. Management did discern in their q323 earnings call that a lot of this tension has been alleviated once disclosing additional benefits and features to be added to their Create Solutions.