Unity Software Inc. (U): What is the Risk Factor?

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Unity Software Inc. (NYSE:U) saw an upside of 12.23% to close Monday at $35.14 after adding $3.83 on the day. The 5-day average trading volume is 11,153,221 shares of the company’s common stock. It has gained $35.40 in the past week and touched a new high 3 times within the past 5 days. An average of 9,227,930 shares of the company has been traded in the last 20 days, and the 50-day average volume stands at 12,821,598.

U’s 1-month performance is 26.72% or $7.51 on its low of $24.69 reached on 01/06/23. The company’s shares have touched a 52-week low of $21.22 and high of $119.65, with the stock’s rally to the 52-week high happening on 01/23/23. YTD, U has achieved 22.91% or $6.55 and has reached a new high 6 times. However, the current price is down -70.63% from the 52-week high price.

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Insider Transactions

U stock investors last saw insider trading activity on Jan 17.Carpenter Carol W. (SVP & Chief Marketing Officer) most recently sold 797 shares at $32.03 per share on Jan 17. This transaction cost the insider $25,528. SVP & Chief Marketing Officer, Carpenter Carol W., sold 797 shares at a price of $31.31 on Dec 15. Then, on Nov 28, SVP and CFO Visoso Luis Felipe sold 16,483 shares at a price of $35.69 per share. This transaction amounted to $588,278.

Valuation Metrics

Moving on to other valuation ratios, the trailing price-to-sales (P/S) ratio is 10.41 while the price-to-book (PB) in the most recent quarter is 4.77.

Unity Software Inc.’s quick ratio for the period ended September 29 was 3.40, with the current ratio over the same period at 3.40. As well, the company’s long term debt to equity for the quarter ending September 29 was 0.77, while the total debt to equity was 0.77. In terms of profitability, the gross margin trailing 12 months is 70.00%. The firm’s gross profit as reported stood at $856.9 million against revenue of $1.11 billion.

Earnings Surprise

For the quarterly period ending September 29 this year, Unity Software Inc.’s cash and short-term investments amounted to $446.77 million against total debt of $1.81 billion. Net income and sales went up compared to those figures reported in the previous quarter. Net income grew 53.94% to -$250.02 million, while revenue of -$204.16 million was 18.34% off the previous quarter. Analysts expected U to announce -$0.15 per share in earnings in its latest quarter, but it posted -$0.14, representing a 6.70% surprise. EBITDA for the quarter stood at more than -$196.14 million. U stock balance sheet for the quarter ending September 29 shows that total liabilities totaled 2.52 billion, with total debt at $1.81 billion. Shareholders hold equity totaling $300.75 million.

Let’s look briefly at Unity Software Inc. (U) price momentum from a technical analysis perspective. The 9-day relative strength index as at close on 23 January was 66.24% to suggest the stock is trending Neutral, with historical volatility in this time period at 90.94%.

The stock’s 5-day moving average is $31.68, reflecting a +11.31% or $3.57 change from its current price. U is currently trading +22.65% above its 20-day SMA, -20.91% above its 100-day SMA. However, the stock’s current price level is away from the SMA50 by +47.90% and SMA200 by-65.20%.

Stochastic %K and %D was 71.52% and 66.68% and the average true range (ATR) pointed at 2.62. The RSI (14) points at 61.04%, while the 14-day stochastic is at 97.62% with the period’s ATR at 2.54. The stock’s 9-day MACD Oscillator is pointing at 0.11 and 1.58 on the 14-day charts.

Analyst Ratings

In the most recent analyst report for Unity Software Inc. (NYSE: U), Jefferies downgraded it to an Underperform rating. They previously had a Hold rating on the stock.

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