Should You Buy Unity Stock Before the Turnaround?

Core Viewpoint - Unity is facing significant challenges due to a series of poor decisions, leading to financial instability and a need for strategic restructuring [1][2][3]. Group 1: Financial Performance - Unity acquired ironSource for $4.4 billion in 2022, but the expected financial benefits have not materialized, with adjusted EBITDA guidance for this year at a maximum of $425 million, far below initial projections [2]. - The company reported a net loss of $141 million on $460 million in revenue, with revenue from its strategic portfolio growing only 2% year over year [6]. - Unity's stock has decreased over 90% from its pandemic-era high, currently valued at approximately $6.3 billion, resulting in a price-to-sales ratio of 3.5 based on guidance for full-year revenue [9]. Group 2: Strategic Changes - Unity has undergone a "company reset," laying off 25% of its workforce and closing offices globally to refocus on its strategic portfolio [3]. - The introduction of a controversial "runtime fee" led to backlash from developers, prompting a reevaluation of the company's pricing strategy and the ousting of former CEO John Riccitiello [4]. - New CEO Matthew Bromberg is tasked with restoring developer trust and establishing a sustainable business model [5]. Group 3: Future Outlook - Unity's future revenue generation will depend on the implementation of the runtime fee structure, which may take years to yield significant results [7]. - The company must balance cost-cutting measures with the need to grow revenue without alienating its developer base, presenting a challenging path forward [12]. - Despite current difficulties, Unity's platform remains a critical tool in the video game industry, known for its ease of use and comprehensive features [11].