4. Unity Software Inc. (NYSE:U)
ARK Investment Management’s 13 Portfolio: 3.41%
ARK Investment Management’s Stake Value: $817.90 million
Number of Hedge Fund Holders: 36
Year-To-Date Share Price Loss : 72.87%
Unity Software Inc. (NYSE:U) is a video game software company which lets content creators and developers create real-time 2D and 3D content. It has lost 72.87% in the year to date, and 56.47% in the last 12 months. ARK Investment Management owned a $817.9 million stake in Unity Software Inc. (NYSE:U) at the close of Q1 2022, representing 3.41% of its total portfolio. Silver Lake Partners was the firm’s largest shareholder with a $3.47 billion stake reported at the end of March.
On May 11, Wedbush analyst Michael Pachter kept an ‘Outperform’ rating on Unity Software Inc. (NYSE:U) shares, and changed the price target to $70 from $125. Shares of Unity slumped after temporary data engineering issues in its tech stack led to a loss in the first quarter, forcing the firm to lower its FY2022 guidance. The analyst believes this self-inflicted wound should be resolved by end of Q4 2022, and allow the firm to regain its trajectory of 30% or higher growth in annual revenue.
Unity Software Inc. (NYSE:U) posted an EPS for the first quarter at -$0.08, which was in-line with estimates. Revenue of $320.1 million was below estimates by $1.02 million, but increased 36.4% year-on-year.
36 hedge funds out of 924 tracked by Insider Monkey reported owning positions in Unity Software Inc. (NYSE:U) at the end of the fourth quarter, the same as reported in the quarter before.
ClearBridge Investments mentioned Unity Software Inc. (NYSE:U) in its Q1 2022 investor letter, stating:
“We took advantage of a correction in higher-multiple stocks early in the first quarter to purchase shares of Unity Software (NYSE:U), a leading platform to create, run and monetize 3D content. With about 1.6 million monthly active creators versus roughly 15 million potential content creators in gaming alone, we believe the company’s Create Engine is still underpenetrated relative to its core addressable market. We similarly see a long runway for growth in Unity’s Operate Solutions segment given its advertising network commands single-digit share of the $60 billion mobile app install ad market today. Furthermore, we believe Unity is well-positioned to expand its addressable market to include industries beyond gaming, on both the operate and create sides of their business (Exhibit 1). The company is not yet free cash flow positive but given strong net expansion rates and high gross margins, we see a path to improving profitability over time, with management notably targeting positive free cash flow this fiscal year.
