Is Unity Software Stock a Buy, Sell, or Hold on Roaring Kitty Rally?

Unity Software kicked off 2025 with a surprising boost, as its shares jumped over 10% in the first trading session of the year. The rally came after a cryptic social media post by Keith Gill, better known as “Roaring Kitty.” Gill shared a video clip featuring Rick James’ song “Unity,” once again showing his knack for stirring up market excitement through social media.

This sudden spike has brought Unity back into the spotlight after a rough 2024. The company’s stock dropped more than 30% last year, even as the S&P 500 Index ($SPX) gained 26.31%. To make matters worse, its competitor AppLovin skyrocketed by an incredible 700%, leaving Unity far behind.

The market’s reaction to Gill’s post was quick and dramatic. Just before the surge, a block trade of 1.32 million shares worth $29.7 million showed renewed interest from retail investors. This comes as Unity is trying to bounce back from a tough third-quarter performance and find its place in an increasingly competitive market.

Let’s examine Unity’s fundamentals to determine whether this rally is the start of a real turnaround or just another case of social media hype driving short-term gains.

A Health Check on Unity’s Financials

Unity Software makes tools that help create and run real-time 3D content, such as video games, interactive experiences, and industrial applications, across different platforms. The company has recently experienced big market swings, especially after Keith Gill’s social media post sparked a noticeable rally in its stock.

Looking at Unity’s stock performance, it’s been a bumpy ride throughout 2024. The stock closed at $24.09 on Jan. 3, 2025, after jumping 11.68% following Gill’s cryptic post. This surge gave the stock a fresh start for the year, with a 7.21% gain since Dec. 31, 2024. Still, Unity is down 34.77% over the past year, showing it has a lot of ground to recover.

When it comes to valuation, Unity is still seen as a growth company trying to find its footing. It has a market capitalization of $9.7 billion and an enterprise value of $10.9 billion, with a forward price-earnings ratio of 26.65x — higher than the sector median of 25.52x. This shows investors are still hopeful about Unity’s future growth despite its recent struggles.

The company’s latest quarterly results show some progress but also reveal ongoing challenges. Unity reported a loss of $0.31 per share, which was better than analysts’ expectations of a $0.39 loss. While still in the red, this was an improvement from the previous quarter, when it beat estimates with a smaller-than-expected loss of $0.32 versus $0.44.

Revenue tells a similar story. Unity brought in $446.52 million in Q3, beating analyst estimates by 4.33%. However, its revenue was lower than the $544.21 million it made during the same period last year, showing that the company is still working through its challenges. Whether recent price gains hold up will depend on how well management delivers on its plans and improves its financial performance.

Strategic Growth Engines

Roaring Kitty’s tweet might have sparked recent buzz around Unity, but the real story for the company lies in its efforts to grow through big, strategic moves. Unity has made two key decisions that could shape its future and explain why investors are starting to pay attention again.

First, Unity 6, the company’s most advanced game development platform yet, was launched on Oct. 17, 2024. This new platform offers major upgrades, like up to 4x faster CPU performance and better tools for creating multiplayer games. It also offers improved graphics and mobile web optimization, showing Unity’s focus on keeping up with developers' needs — especially as mobile gaming grows fast.

Second, Unity has been shaking things up in its advertising business. In August, the company hired Jim Payne as its chief product officer for advertising. Investors are hoping that Payne can help Unity tap into the $150 billion mobile ad market.

These moves show that Unity is working on two fronts: improving its game development tools and growing its advertising capabilities. Both are big steps toward building a stronger future for the company.

What the Experts Are Saying on Unity Stock

Wall Street experts are feeling a mix of hope and caution about Unity Software's future. Analysts expect mixed results when the company next reports earnings.

Analysts think Unity will lose about $0.35 per share but bring in around $423 million in revenue for the quarter. For the year, they're predicting a bigger loss of $1.71 per share, with total revenue hitting $1.76 billion. These numbers show that Unity is still working on becoming profitable, but its revenue is still holding steady as it goes through some changes.

When it comes to recommending the stock, analysts are leaning slightly positive. They’re calling it a “Moderate Buy” overall. On average, they think the stock price will be around $22.68, which is actually 6.77% lower than where it is now. Out of 19 analysts covering the stock, six recommend a "Strong Buy," one suggests a "Moderate Buy," 10 advocate holding the stock, and two advise selling.

This opinion split shows that analysts aren’t quite sure what to make of Unity right now. Some see big potential in the company’s current performance and market position, while others are worried about its financial troubles.

Conclusion

Unity Software presents a mixed investment case, despite the recent rally sparked by Roaring Kitty. While the stock experienced momentum in early 2025, fundamental challenges continue to loom. For potential investors considering Unity, the current rally seems to be driven more by social media sentiment than by any real improvements in the company’s fundamentals. Unless Unity can demonstrate sustained progress in its financial metrics and profitability, the stock remains a speculative investment rather than a solid opportunity.

On the date of publication, Ebube Jones did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.

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