Unity Software (U), founded in California, is a platform for creating all kinds of interactive content, such as video games.
The company’s Generate Solutions is a full array of software solutions for developers to create 2D and 3D content. In addition, the company’s Operate Solutions provides a set of tools for app developers to build and monetize their user base.
The firm has seen tremendous growth momentum as a result of the pandemic, with shares up almost 8% in the last year. With the rising concept of the metaverse and increased in-game expenditure, the corporation is expected to continue its rally even after the pandemic.
Furthermore, the company recently acquired Weta Digital, a platform for developing and running interactive, real-time 3D content, adding a new feather to its cap. The deal will further boost Unity Software’s offerings in the 3D space.
See Analysts’ Top Stocks on TipRanks >>
Shares Fall Post-Q3 Results
Unity Software’s stock has dropped over 12% since the company announced its Q3 earnings on November 9. In Q3, the company reported a loss of $0.06 per share, which was worse than Wall Street’s forecasts.
The stock appears a little risky due to the current lack of profitability. Furthermore, when Insiders sell, the picture gets considerably gloomier.
So, who exactly are Insiders? Insiders are those who own more than 10% of a publicly listed firm, sit on its board of directors, or work as a senior executive. They often have more information to work with because of their unique and near proximity to the center of a firm or industry.
Insider Trading Details Depict a Cautious Picture
TipRanks’ Insider Trading tool draws on publicly available information to determine Insider activity on a stock. TipRanks determines whether the Sells were likely based on the Insider’s beliefs about the company’s performance, calling them Informative Sells.
Two days ago, Director David Helgason, an insider, made an Informative Sell of Unity Software shares valued at $25,965,773. David’s overall ownership value drops to $1.54 billion after the deal.
Apart from David, Senior Vice President Clive Downie sold $5,999,001 worth of stock in the last three days. Another insider, Director SLTA IV (GP), L.L.C., which owns more than 10% of the company’s stock, sold shares over the last nine days as well.
Altogether, there were 12 Informative Sell transactions made by 5 Insiders in November, vs. only one Informative Buy transaction made by an Insider.
Insiders’ loss of faith in the firm could well be reflected in the Informative Sell trend. Insider trading activity has long been seen as a reliable indicator of stock performance; thus, it’s possible that Unity Software’s stock price may fall in the near future.
Users may utilize TipRanks features like Insiders Hot Stocks and Top 25 Corporate Insiders to learn more about insider trading and obtain an advantage over the market.
Expert’s Take
Kash Rangan of Goldman Sachs, on the other hand, is optimistic about the company’s Q3 performance. Three weeks ago, he wrote that the “flywheel between Create and Operate” is still in fine form.
Rangan also feels that the acquisition of Weta Digital “increases the strategic relevance of Unity across industries, with best-in-class graphic design and visual effect features.” The transaction will also increase Unity Software’s “Total Addressable/Available Market (TAM) by approximately $10bn through a direct funnel to high-value digital artists,” according to him.
As a result, Rangan rated the stock a Buy and raised his price target to $180.
Wall Street’s Take
According to TipRanks’ consensus rating, Unity Software stock has a Moderate Buy consensus rating based on 6 Buys and 3 Holds. As for price targets, the average U price target of $171 implies 12.7% upside potential from the current levels.
Disclosure: At the time of publication, Shalu Saraf did not have a position in any of the securities mentioned in this article.
Disclaimer: The information contained in this article represents the views and opinion of the writer only, and not the views or opinion of TipRanks or its affiliates Read full disclaimer >
