Unity Software (NYSE: U) stock is seeing explosive gains in Thursday's trading. The company's share price was up 28% as of 12:45 p.m. ET, despite the S&P 500 (SNPINDEX: ^GSPC) and the Nasdaq Composite (NASDAQINDEX: ^IXIC) both being down 0.7%.
Unity published its fourth-quarter results before the market opened this morning and delivered sales and earnings performance that crushed the market's expectations. Adding to the sweetness of the report, the company also issued forward guidance that came in well above Wall Street's targets.
Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Learn More »
Unity stock soars on Q4 beats
Unity reported a loss per share of $0.30 on sales of $457.1 million in Q4, topping the average Wall Street analyst estimate's call for a per-share loss of $0.37 on sales of $433.47 million. While revenue for the period was down 25% year over year, the performance still came in far better than the market expected -- and there were clear bright spots on a category basis. The company has been shifting its monetization practices with long-term engagement in mind and aiming to improve profitability, and sales for the core strategic portfolio at the heart of this initiative were up 4% year over year to $423 million.
What's next for Unity?
For the first quarter, Unity is guiding for sales to come in between $405 million and $415 million. Meanwhile, non-GAAP (generally accepted accounting principles) adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) is projected to come in between $60 million and $65 million.
Even though Unity's midpoint sales guidance calls for a sequential quarterly decline of roughly 10%, investors are actually excited for one of the big catalysts behind the projected decline. The company is rolling out its Unity Vector artificial intelligence (AI) platform. While it's expected to create some sales cannibalization in the near term, it has the potential to be a powerful long-term growth driver and could help significantly improve the business' margins.
Don’t miss this second chance at a potentially lucrative opportunity
Ever feel like you missed the boat in buying the most successful stocks? Then you’ll want to hear this.
On rare occasions, our expert team of analysts issues a “Double Down” stock recommendation for companies that they think are about to pop. If you’re worried you’ve already missed your chance to invest, now is the best time to buy before it’s too late. And the numbers speak for themselves:
- Nvidia: if you invested $1,000 when we doubled down in 2009, you’d have $361,026!*
- Apple: if you invested $1,000 when we doubled down in 2008, you’d have $46,425!*
- Netflix: if you invested $1,000 when we doubled down in 2004, you’d have $562,659!*
Right now, we’re issuing “Double Down” alerts for three incredible companies, and there may not be another chance like this anytime soon.
*Stock Advisor returns as of February 3, 2025
Keith Noonan has positions in Unity Software. The Motley Fool has positions in and recommends Unity Software. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
