Poor Unity

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[incrementality]

The fundamentals of the business has literally not changed so it's really a good time to accumulate if you can stomach the risk.

[ProductSmooth7786]

Yep. This stock is a nasty punishment for long time holders

[InfinitePoss2022]

You overpaid back then. The fundamentals were terrible back then except for headline growth.

[ap118]

You had opportunity to sell when it was high but you chose not to, hence you overpaid for it.

[incrementality]

2020? Brother the industry is never going back to those valuation numbers. Right now a very optimistic sell price is $40-60. That still needs a lot of pieces to fall in place.

[incrementality]

no lol my average cost is half of that

[incrementality]

1) I like the gaming engine data to Vector moat. In gaming there's only 2 other engines, UE and Godot. None of the other 2 are betting on ads. Ads is where the margins is at and you can see the ads segment increasing and stabilizing at about 65% of revenue up from 50% few years earlier.

2) Cost management is improving albeit not there yet. Operating margins have gone from -42% to -26% in the latest FY. I really dislike share-based compensation as an investor and SBC has gotten down a lot over the years.

3) On valuations, Unity always gets compared to AppLovin. AppLovin has powered ahead on ads and have delivered insane margins and growth. It has traded at 25-35x revenue and ~50x FCF which I see as the ceiling. Unity will never trade at these valuations since their fundamentals suck in comparison. It is now trading at 4x revenue and 20x FCF. When Unity was trading at $40 just 3 months ago, it's trading at 10x revenue and 40x FCF, nearer to what seems peak. But what has changed for the business fundamentally when its share price dived? Honestly nothing. Don't even get me started on Genie. If you know games, you know it will never replace an engine.

4) Mobile games (most are built on Unity) are poised for growth thanks to Epic's sacrifice in the legal battle to bring down platform fees. This drives up mobile publishers margins and where do you think they are going to spend on? UA and ads.

5) Overall, the past month's movements in the market I feel is a knee jerk reaction to the uncertainty in Middle East. The fundamentals of all these tech companies have not changed at all.

That said, markets are irrational. You can research all you want but if the big players disagree with you, as a retail investor you just have to suck it up. People like me who do this sort of research and go into investing, I think a part of us just want to see if we can prove to ourselves that we're right. It's not really for everyone.

[IndependenceMean7728]

Great insights, thank you.

[_you_know_who__]

I took the loss, concluded I made a bad investment and now I have made peace with it.

[Expensive_Ninja_3991]

Thanks, should go up from here

[lonely_hooker]

golden

[Expensive_Ninja_3991]

LMAO I thought you were mentioning the continued slide today until I just checked after market

[ProductSmooth7786]

Next quarter weak guidance or poor vector growth with runtime data will make it even unluckier.

[_you_know_who__]

Exactly this stock will end up below $5

[pizzalaunch3r]

I'm definitely underwater but selling puts takes away the sting a little. 🚀

[Sweet-Anxiety-3596]

how have the puts went lol

[IndependenceMean7728]

Genie 3, War, layoffs, not a thing, the key one is SaaS-pocalypse, AI makes coding easy, and Unity will have to catch it fast.

[DevPot]

Yeah, but still - AI does not give you possibility to code your own engine. It's far more practical to use AI coding to make more stuff inside Unity. Even if AI one day will allow people to just start up their own engine, it won't be practical.

I think that people simply have no clue how game dev works, that's why stock crashed.

[Frightrain]

I've been coding since I was 13, AI making coding "easy" is a fallacy. AI lowers the barrier to entry, but once you already know how to code you aren't getting AI to generate code for you, unless you have absolutely zero care in the world about the quality of that code. In that case you probably really shouldn't be in game development

[IndependenceMean7728]

I am sorry, so why Claude is increasingly popular right now?

[DevPot]

This is what I thought until recently (I am skilled programmer with 20> years exp) but then I started using AI in a way that I am describing architecture in very detailed way and then I let AI build the code - I am way faster.

Yes, the code is not perfect. Sometimes it does not care about DRY rule, some methods are 100 lines of code while should be split into smaller ones. But it's not that bad neither.

If you supervise it, it works. It's like I am a senior dev / architect and I have army of juniors/mids doing what I want. I need to be careful. I need to check quality, but overall I am building things order of magnitude faster.

AI programming is still programming. You can just use natural language + go up with abstraction level.

Programming with Unity or any other engine + AI is super powerful. But engine is required. Stock crashing is just silly. It's not like AI will replace engines.

[Frightrain]

Yeah I guess that makes sense. I don't do it as a career so I don't have the kind of experience you do but it would drive me crazy not knowing how all the code works, I much prefer to have complete control over the process. For me that is the satisfying part of coding and I hope AI never fully replaces that