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Unity Software is Surging, is the Stock Still Worth Buying?

Published 11/17/2021, 12:33 PM
Updated 11/17/2021, 01:30 PM
© Reuters.  Unity Software is Surging, is the Stock Still Worth Buying?

Software development company Unity’s (U) shares have hit a record high recently after the company broke Wall Street’s earnings and revenue expectations for the third quarter. However, does the stock have further upside to deliver? Read on to find out.The shares of gaming-engine company Unity Software Inc. (U) hit their $207 all-time high on November 15, 2021, after the company's third-quarter revenue and EPS surpassed Wall Street estimates, and the company increased its guidance for full-year 2021 revenue to $1.08 billion - $1.09 billion, up 40% year-over-year.

The company agreed to acquire Weta Digital for $1.63 billion, which should help it develop VFX tools and focus on metaverse opportunities. The stock has gained 39.5% in price over the past month and 124.8% over the past six months to close yesterday’s trading session at $196.65.

However, Cathie Wood's ARK Invest has sold $27 million worth of U shares. In addition, the company recently witnessed a decline in hedge fund sentiment. Furthermore, its non-GAAP loss from operations is expected to be between $20 million - $25 million for the fourth quarter. And since the company is not expected to turn profitable anytime soon, its near-term prospects look bleak.

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