Unity Software: 2024 Will Be A Show-Me Year (Rating Downgrade)

Summary:

  • I am skeptical about Unity Software’s ability to achieve the touted $1 billion EBITDA in 2024, prompting a revision to a sell rating.
  • Unity, currently navigating a “show-me” narrative, faces immediate challenges, including a product portfolio assessment and potential workforce reductions.
  • Unity’s valuation as a growth stock, coupled with significant debt, raises doubts about reaching the EBITDA target, making the stock less appealing.

Unity Software headquarters in San Francisco

Sundry Photography

Investment Thesis

Unity Software (NYSE:U) will report its Q4 2023 results on Monday, February 26th after the close. This is a business that I assert has now been put down as a “show-me” story.

And as such, I don’t


Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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