Today was a pretty good day for Unity Software (NASDAQ:U), as it notched up fractionally in Friday afternoon’s trading after picking up a new bit of analyst commentary that gave investors hope. That was just what Unity investors needed after the latest debacle that still has software developers enraged. With Unity a major part of the software development landscape, this could pose a serious problem.
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The Unity engine is very popular with software developers, especially game designers, who have successfully used the platform to make beloved games from “7 Days to Die” to “Cuphead” to even “Rust.” And Bank of America was pretty happy with Unity’s improved monetization efforts in their creation engine. Happy enough to bump up the rating on Unity from “neutral” to Buy and to upgrade the price target from $46 to $56.
Yet, one thing that may not have occurred to Bank of America in the course of its analysis was the reaction from game developers to Unity’s planned fee hike. Unity plans to charge software developers a fee based on installation once those games have passed certain “thresholds.” This runs contrary to a “commitment” that Unity made to developers back in 2019, in which it stated it would be an “open platform” as opposed to a platform that demanded royalties from developers. Game developers are already looking to transfer their games currently in development to completely different engines, and reactions run from the hilarious to the outright obscene to the actively threatening. Unity CEO John Riccitiello canceled a town hall meeting to answer questions about the move.
Meanwhile, analysts are split over Unity Software’s overall position. Nine Buy ratings and seven Holds come together to make a consensus opinion of Moderate Buy for Unity Software stock. Further, with an average price target of $49.17, Unity Software stock offers investors a 37.92% upside potential.
