Unity Software Inc (NYSE: U) is up 30% on Thursday after the videogame-engine developer reported narrower than expected loss for its third financial quarter and issued encouraging guidance for the future.
Is it time to sell the Unity stock?
Shares are also up because the monthly inflation data came in better than expected this morning.
Consumer prices, as per the U.S. Bureau of Labour Statistics, were up 7.7% in October versus a 7.9% year-on-year increase expected (read more).
While that’s still way above the 2.0% target, it at least entertained the possibility that the Fed will consider changing its stance on the aggressive rate hikes that have been a nightmare for the unprofitable tech companies (including Unity Software) this year.
Following the earnings report, Needham’s Bernie McTernan also reiterated his “buy” rating on the Unity stock. He dubs its “Create” platform the “best in class” and sees upside in shares to $35. That’s up another 25% from here.
Unity Software’s Q3 earnings snapshot
- Lost $253.7 million versus the year-ago figure of $155.1 million
- Per-share loss also went up significantly from 41 cents to 84 cents
- Adjusted loss per-share was 3 cents as per the earnings press release
- Revenue jumped 13% on a year-over-year basis to $322.9 million
- Consensus was 15 cents of adjusted loss on $326.1 million revenue
In related tech news, Unity Software closed its $4.40 billion acquisition of IronSource earlier this week.
Unity stock up on encouraging guidance
Unity Software now forecasts $1.37 billion to $1.39 billion in revenue this year, including up to $445 million it expects to generate in the fourth quarter.
In comparison, analysts were at $377.8 million for the quarter and $1.31 billion for the full financial year. In the earnings press release, CFO Luis Visoso said:
We’re taking a prudent approach in Q4, given the current macro environment. We have carefully managed costs this year and will drive more efficiencies next year, as we continue to capture the large opportunity in front of us.
Versus the start of 2022, Unity stock is still down about 80%.