A Sleeping Giant in the Gaming Industry
The past few years have seen a significant surge in major stock indexes, but not all companies have shared in this success. One notable exception is Unity, a video game engine developer that has underperformed the market by a substantial margin. The company’s stock has plummeted by around 88% from its all-time high, and it’s easy to see why. Unity’s mistakes, including costly acquisitions and a poorly received attempt to charge developers additional fees, led to a company reset, major layoffs, and a change in leadership.
A Valuable Asset Struggling to Find Its Footing
Despite being one of only two commercial game engines, alongside Unreal Engine from Epic Games, Unity has struggled to build a viable business around its incredible asset. The Unity game engine is a go-to option for video game developers, but the company’s struggles have been evident. The expensive acquisition of ironSource, meant to bolster the mobile advertising business, has failed to produce results. Furthermore, the botched rollout of additional fees for developers severely damaged the brand, ultimately leading to a change in CEO and a vast cost-cutting effort.
A New Era of Leadership and Reform
Under new CEO Matthew Bromberg, Unity has taken steps to rectify its mistakes. The company has killed off the hated additional fees, instead raising subscription pricing for its largest customers. Additionally, Unity is rebuilding the tech stack behind its advertising business to deliver better results for advertisers. While revenue is still in decline, and the bottom line is deep in the red, there is hope for a turnaround.
A Risky but Potentially Rewarding Investment
Unity’s current valuation of around $9 billion is difficult to justify based on its current results. However, with the Unity engine as popular as it is, it’s not hard to imagine a future where the company is worth far more than its current market capitalization. The key to success lies in getting its core business growing again. Higher subscription fees and new AI-powered products, such as Unity Muse, can add value to the company. Furthermore, fixing its advertising business by reworking the machine learning stack and data infrastructure could be a huge opportunity.
Don’t Miss Out on the Next Big Thing
If you’re worried about missing out on the next big investment opportunity, now may be the time to take a closer look at Unity. With its incredible asset and new leadership, the company has the potential to be a big winner in the long run. Don’t wait until it’s too late – consider investing in Unity today.
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