💡$U 🎮ARK just doubled its shares after -30% on earnings💰+30%📖 Unity classes itself as a world leading platform for creating and operating interactive real-time 3D content, mostly in the video game space. Unity grew its revenue 39% year over year in Q4 to $220 million, and free cash flow improved to positive $3.6 million compared to negative $9.7 million for the same period a year ago. The company now has 793 customers spending over $100,000 with Unity over the last year, compared with just 600 in 2019 (Motley Fool). Unity now has no debt and forecasts 23% revenue growth over the next year. Despite this, the earning report mentioned that Apple’s privacy updates - which will prompt Apple device uses if they want to opt out of application tracking activity - would result in a $30 million revenue reduction.
NYSE:U Ark has almost doubled its position size in Unity after the disappointing earnings, taking its ownership of shares from 2.4 million to 4.7 million today - it spent $177 million to achieve this. In addition to this, analysts at Berenberg marinated a buy rating for Unity and raised the price target from $106 to $165 noting that “the mobile gaming opportunity is still nascent and Unity has other markets outside of gaming that will provide incremental growth.” Median price targets see the stock at $1150 and high forecasts see $175.
📈Shares in Unity dropped by 30% from its all time highs in trading on Friday of last week. Despite this, price seems to have bottomed out with a number of failed attempts to break the $124, suggesting the bearish volume may be becoming exhausted. Price is also looks to be supported by a bullish price channel, however this interpretation is subjective. Short term, the price is still bearish, trading in a bearish price channel. With this being said, current price could be an area of bullish confluence - bottoming price action and support of both the bullish and bearish price channels - which could move the price higher (see area highlighted in the blue square). A conservative trade might be a gap fill of the earning dip which would see about 14% upside. A return to the $165 level though would see a +30% move.
🔎This is not financial advice. Always do your own research and due diligence. Always wait for directional confirmation before entering a trade.
