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3 REASONS TO BUY THIS GAMING STOCK
I was 𝗘𝗫𝗖𝗜𝗧𝗘𝗗 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… 𝗛𝗘𝗥𝗘'𝗦 𝗪𝗛𝗬
⚡ MARKET LEADERSHIP
Over 50% of 𝗔𝗟𝗟 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 𝗖𝗢𝗠𝗣𝗘𝗧𝗜𝗧𝗜𝗢𝗡 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 𝗖𝗢𝗟𝗟𝗘𝗚𝗘𝗦 in the UK use Unity over UE in their computer courses which is perhaps more 𝗜𝗠𝗣𝗢𝗥𝗧𝗔𝗡𝗧 than it sounds!
⚡ LONG TERM GROWTH
Unity grew their revenue 44% last year and is guiding for 40% this year… This is 𝗩𝗘𝗥𝗬 𝗚𝗢𝗢𝗗 𝗚𝗥𝗢𝗪𝗧𝗛 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 𝗥𝗘𝗠𝗔𝗜𝗡 𝗦𝗧𝗘𝗔𝗗𝗬 this year! You can see how Unity's fundamentals compare to other popular growth stocks below 👇
Analysts expect to see a deceleration post pandemic, however I think that Unity has plenty of ways to further 𝗠𝗢𝗡𝗘𝗧𝗜𝗭𝗘 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 𝗣𝗔𝗜𝗗 𝗦𝗨𝗕𝗦𝗖𝗥𝗜𝗕𝗘𝗥𝗦 in the future.
⚡ DIVERSIFIED
It’s not just amateur game designers that love Unity’s software! Some of the 𝗟𝗔𝗥𝗚𝗘𝗦𝗧 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 𝗖𝗨𝗦𝗧𝗢𝗠𝗘𝗥𝗦 each paying over $100k in annual revenue.
The company grew its high paying customer base by 35% (year-over-year) and inked 𝗘𝗫𝗖𝗜𝗧𝗜𝗡𝗚 𝗣𝗔𝗥𝗧𝗡𝗘𝗥𝗦𝗛𝗜𝗣𝗦 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 𝗚𝗘𝗢𝗚𝗥𝗔𝗣𝗛𝗜𝗖𝗔𝗟𝗟𝗬 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 𝗘𝗫𝗣𝗘𝗡𝗦𝗜𝗩𝗘! 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 𝗘𝗡𝗧𝗥𝗬 𝗣𝗢𝗜𝗡𝗧𝗦 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 𝗞𝗘𝗘𝗣 𝗔𝗡 𝗘𝗬𝗘 𝗢𝗡 𝗧𝗛𝗜𝗦 𝗦𝗧𝗢𝗖𝗞!
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