3 REASONS TO BUY THIS GAMING STOCK



I was π—˜π—«π—–π—œπ—§π—˜π—— when I heard that Unity was going public at between $34-42 per share! Despite this range – 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 Unity… π—›π—˜π—₯π—˜'𝗦 π—ͺ𝗛𝗬



⚑ MARKET LEADERSHIP


Over 50% of π—”π—Ÿπ—Ÿ PC, mobile and console games are now being built on Unity’s software engine! Their platform is making the gaming development process easier and more affordable for developers. They do have π—–π—’π— π—£π—˜π—§π—œπ—§π—œπ—’π—‘ from rival Unreal Engine (UE) which means that Unity won’t 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 I’m aware - The vast majority (if not all) of the π—–π—’π—Ÿπ—Ÿπ—˜π—šπ—˜π—¦ in the UK use Unity over UE in their computer courses which is perhaps more π—œπ— π—£π—’π—₯𝗧𝗔𝗑𝗧 than it sounds!


⚑ LONG TERM GROWTH


Unity grew their revenue 44% last year and is guiding for 40% this year… This is π—©π—˜π—₯𝗬 π—šπ—’π—’π—— π—šπ—₯𝗒π—ͺ𝗧𝗛 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—₯π—˜π— π—”π—œπ—‘ π—¦π—§π—˜π—”π——π—¬ this year! You can see how Unity's fundamentals compare to other popular growth stocks below πŸ‘‡



Analysts expect to see a deceleration post pandemic, however I think that Unity has plenty of ways to further π— π—’π—‘π—˜π—§π—œπ—­π—˜ 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 we’ll see the company shift those users to π—£π—”π—œπ—— 𝗦𝗨𝗕𝗦𝗖π—₯π—œπ—•π—˜π—₯𝗦 in the future.


⚑ DIVERSIFIED


It’s not just amateur game designers that love Unity’s software! Some of the π—Ÿπ—”π—₯π—šπ—˜π—¦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 𝟴𝟬𝟬 π—–π—¨π—¦π—§π—’π— π—˜π—₯𝗦 each paying over $100k in annual revenue.


The company grew its high paying customer base by 35% (year-over-year) and inked π—˜π—«π—–π—œπ—§π—œπ—‘π—š 𝗣𝗔π—₯π—§π—‘π—˜π—₯π—¦π—›π—œπ—£π—¦ with numerous companies including Snap & Autodesk proving Unity is serious about growing it’s non-gaming revenues! Lastly, It’s also worth mentioning that Unity’s business is π—šπ—˜π—’π—šπ—₯π—”π—£π—›π—œπ—–π—”π—Ÿπ—Ÿπ—¬ 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 π—˜π—«π—£π—˜π—‘π—¦π—œπ—©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 π—˜π—‘π—§π—₯𝗬 π—£π—’π—œπ—‘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 I’ve decided to add Unity to my portfolio and why you should π—žπ—˜π—˜π—£ 𝗔𝗑 π—˜π—¬π—˜ 𝗒𝗑 π—§π—›π—œπ—¦ π—¦π—§π—’π—–π—ž!




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