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3 REASONS TO BUY THIS GAMING STOCK
I was ππ«πππ§ππ when I heard that Unity was going public at between $34-42 per share! Despite this range β Unity actually opened at $75 on the IPO day! Because of this, I decided to reassess the stock before pulling the trigger! After a 4 month steady climb, the stock has pulled back from a record $170 and I have decided to open a small position in Unityβ¦ πππ₯π'π¦ πͺππ¬
β‘ MARKET LEADERSHIP
Over 50% of πππ PC, mobile and console games are now being built on Unityβs software engine! Their platform is making the gaming development process easier and more affordable for developers. They do have ππ’π π£ππ§ππ§ππ’π‘ from rival Unreal Engine (UE) which means that Unity wonβt have everything their own way.
However, unless UE happens to be Google or FB in disguise, a bit of competition is healthy and should only help grow the entire market. Lastly, as far as Iβm aware - The vast majority (if not all) of the ππ’ππππππ¦ in the UK use Unity over UE in their computer courses which is perhaps more ππ π£π’π₯π§ππ‘π§ than it sounds!
β‘ LONG TERM GROWTH
Unity grew their revenue 44% last year and is guiding for 40% this yearβ¦ This is π©ππ₯π¬ ππ’π’π ππ₯π’πͺπ§π for a company turning over $700m. I believe that Unity will have given themselves a low bar to jump over and therefore I expect sales growth to π₯ππ πππ‘ π¦π§ππππ¬ this year! You can see how Unity's fundamentals compare to other popular growth stocks below π
Analysts expect to see a deceleration post pandemic, however I think that Unity has plenty of ways to further π π’π‘ππ§πππ their systems once a new generation of developers are reliant on their tools! In fact, over 70% of users currently use the free version of Unity Software and I am sure that weβll see the company shift those users to π£πππ π¦π¨ππ¦ππ₯ππππ₯π¦ in the future.
β‘ DIVERSIFIED
Itβs not just amateur game designers that love Unityβs software! Some of the πππ₯πππ¦π§ game development companies in the world such as EA, Take Two, Nintendo & Ubisoft are customers of Unity. The company caters to both extremes of the market and everything in between, in fact the company has almost π΄π¬π¬ ππ¨π¦π§π’π ππ₯π¦ each paying over $100k in annual revenue.
The company grew its high paying customer base by 35% (year-over-year) and inked ππ«πππ§ππ‘π π£ππ₯π§π‘ππ₯π¦πππ£π¦ with numerous companies including Snap & Autodesk proving Unity is serious about growing itβs non-gaming revenues! Lastly, Itβs also worth mentioning that Unityβs business is πππ’ππ₯ππ£πππππππ¬ diversified with revenue coming in from all over the globe (Seen below).
Before you run off and buy shares in this terrific gaming stock, I want to point out that Unity stock is ππ«π£ππ‘π¦ππ©π! At over 40 times sales, a lot of the future growth is already priced in. However, after some quick technical analysis I have identified what I believe are 3 good ππ‘π§π₯π¬ π£π’ππ‘π§π¦ in the stock. The first of which was $138, however I will hold off increasing my position size until Unity pulls back further to around $120 (see below for a very basic graph showing these entry points).
There you go, 3 reasons why Iβve decided to add Unity to my portfolio and why you should ππππ£ ππ‘ ππ¬π π’π‘ π§πππ¦ π¦π§π’ππ!
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