When Unity software (NYSE: U) reported earnings earlier this month, investors had high expectations. The company generated revenue and earnings per share that easily exceeded analysts’ consensus estimates. However, even with their strong performance, the shares plunged 14% after the financial report.
In this clip Motley Fool Live recorded on February 8, Jason Hall, host of “The Wrap”, and Danny Vena, a contributor to Fool.com, discuss recent results and why the stock paused after its rapid rise.
Jason Hall: Danny, do you want to get that question about Unity? Take a few minutes to talk about Unity’s earnings.
Danny Vena: I make. I just looked briefly here. What I found out was that it was not a bad quarter. It seems that revenue grew 39% year over year, which is not a bad number. But that was a slowdown in the 53% revenue increase they delivered during the previous quarter. So there was a little bit of a slowdown there.
Its net loss was about $ 0.10 per share, which was much better than a net loss of $ 0.79 per share in the same period last year. The company achieved many metrics records during the quarter.
But I think there are two things. First, it was the small slowdown in revenue growth that we observed.
The second is the fact, if you look at what the stock did, it is important to remember that Unity Software only went public, I mean in September. Since the moment the stock went public in September, it grew by around 152% after the first day of trading, only between September and December. If you look now, the stock is basically, let’s see, it’s just.
Jason Hall: That is [down] about 28%.
Danny Vena: Yes. That means it is still up 83% year on year. In fact, it hasn’t even been a year since it debuted in September.
Jason Hall: Right. Five months.
Danny Vena: The stock is, yes, taking a while to breathe. If you believe in the company’s long-term viability, I think investors have sold a little because growth has slowed down a bit. But this is not a business killer and could just back up a little and look at the long term, stocks are still up 83% in just a few months. I don’t think there’s a problem with that.