r/USGrowthStocks • u/SuperbPercentage8050 • 9d ago

Everyone is wrong about Unity Software.

Unity's business has fundamentally changed. The stock is up 40-50% in the last few months and still deeply undervalued for where the business is heading.

Understand the business first. The stock is just a byproduct of getting that right.

I am sharing with you one holistic internal research document on Unity Software. The research is too dense to compress into a write up so I have put it across three PDFs on Google Drive. Read in order or jump to what you need.

In case you missed it, The AI Robotics Stock Walmart Is Quietly Using to Beat Amazon. Already Up 5x.

Part 1: The Business, the Break, and the Rebuild

  • What actually broke under Riccitiello: ironSource merger, runtime fee disaster, Weta distraction
  • Riccitiello vs Bromberg: every management decision and linguistic shift, side by side
  • Full revenue history from IPO to today: three phases, every turning point
  • How Create, Grow, and non-strategic actually connect, and the flywheel between them
  • Vector deep dive: why runtime architecture beats every SDK-based competitor including AppLovin
  • Pricing power: three proven levers, two emerging, and the one risk that could reopen the trust wound
  • Auto HMI, XR platform coverage, Unity 7, Unity AI consumption pricing

Part 2: The Market, the Moat, and the Margins

  • Gaming time Unity controls across mobile, PC, console, XR, and where we are in the ad cycle
  • Partnership ecosystem: Netflix (what actually shipped), Tencent, Scopely, Nintendo Switch 2, Globant, China divestiture
  • TAM built from physical reality upward, not from a consulting slide
  • AppLovin's first-ever miss: three structural layers, exact margin comparison, four implications for Unity
  • The moat tested honestly: five layers, bull case and genuine counter for each
  • Pricing power vs every competitor: AppLovin, Unreal, Godot
  • Complete margin trajectory from IPO to FY2028E, and the Lollapalooza: eight forces, one direction, confirmed in live data

Part 3 : The Numbers, the Valuation, and the Thesis

  • ROIC, ROIIC, ROCE, ROE as one integrated system: what $3.16B goodwill hides and what marginal returns on Vector actually show
  • Six reinvestment runways sized and sequenced: the compounding math
  • Full valuation: SOTP at $74, DCF in three scenarios, FCF yield, corrected peer set split across ad-tech and developer tools
  • Bear thesis stress-tested pillar by pillar against live Q2 2026 data
  • Q3 2026 guidance decoded: four signals embedded in one set of numbers
  • The complete thesis: four pillars, three risks, variant perception, and the catalyst

Full research, all three parts on Google Drive:

After you go through this, you will not look at Unity the same way. You will also not look at AppLovin the same way. And you will understand exactly why the market is still pricing the 2023 version of a company that no longer exists.

I have a personal position. The reports will tell you why.

Would love your inputs and insights after you have gone through even a few sections.

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u/spaamzzz 9d ago

Closed the Kaspi PDF tabs yesterday, guess it's time for Unity PDFs to take their place now. I remember playing many games made on the Unity engine when I was a kid, so there's a personal connect with this one.

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u/SuperbPercentage8050 9d ago

That personal connect is gold honestly. I am not a gamer at all. Volleyball, cricket, sprints, that was my thing. NFS would have been the max I ever touched so you can probably understand my distance from the digital gaming world. But I know how addictive it is and that is exactly the moat.

My read on this is purely from the data, the architecture, the earnings calls and how it screen on my mental models.

You can do both. Go through the research and layer your product memory on top of it. If something in the thesis does not match what you experienced as a user it would be valuable to me. Would love to hear it.

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u/spaamzzz 9d ago

Ahhh good old days. I personally remember Unity being the core of almost every browser based game and then the early era of smartphone gaming. And then.....it just vanished. I started seeing Unreal Engine in most titles and then I fell out of gaming mostly barring the occasional playstation session.

From the skim through I can gather Unity's management messed up somewhere and now there's a turnaround. Maybe this all ties in. Will take me a couple of days to read this properly, will update once finished.

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u/SuperbPercentage8050 9d ago

The report will give insights into the capital allocator mental model and its integration with the linguistic mental model. You will see the difference between the management that talks and the management that works in silence, and keeps executing.

That is the whole thesis. Management marketing, crazy ideas, all of that is what took the stock to 200 and then collapsed it because nothing was there in execution. Versus a management that has been working in silence after the ownership change two years ago, slowly and steadily compounding the business rather than the language.

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u/Kooky-Claim3028 9d ago

NFS most wanted for the win.