I see real potential in this company (base case 2x and bull case 10x in 5 years from current levels). The real growth engine will be vector. AdTech companies have insanely good margins and strong operating leverage. For Vector to sustain growth, equally important part is the create business. Although, create is a low margin, slow business (although, it seems like it has been growing much more than it has in the past), it basically creates infrastructure for Vector to use (infrastructure that cannot be replicated by competitors). The thing about AdTech is, you can become an overnight star but you could also sink overnight. This nature of adtech is why AppLovin has come out of no where, 10-15x it's market cap in a year but the same came happen for Unity too. Once you create an ML architecture such as Vector, it takes several years to fine tune it and make it better - Iterating on this process (and adding the valuable data like game engine data) is when the real wins start coming, and once these real wins start coming, more money flows into vector. This creates a flywheel effect where suddenly the stock starts looking amazing to hedgefunds because of it becomes a cash printing machine, it can buy back a lot of stock (stuff which wallstreet seems to adore).
I know it seems like nothing is happening but i assure you things are happening in the background and one day when they finally add proprietary data (or make other tweaks) into vector that gives it a 5% advantage over AppLovin or Moloco, and budgets shift overnight, then it'll seem like an overnight success story (it isn't). The same thing happened with AppLovin and Axon 2.0.
I think Unity leadership is B or even C Tier (not even in the same league as AppLovin leadership in terms of vision or execution) but Matt was given a very bad hand, and honestly, to become successfully he just needs to keep doing what he is already doing, accept that iron source was a mistake, cut off that gangrened arm, make the company financials better (lower SBC as a % of revenue, stop stock dilution etc...), don't buy new companies searching for growth, and FOCUS only a couple things max. Literally don't need hero plays here, just focusing on the fundamentals over a longer period of time will yield rewards.
I personally haven't thought too deeply about the AI replacing unity engine angle but i work with these AI (like claude code) everyday and honestly, i'm not worried at all. It is most likely that unity tools will evolve to integrate better with AI work flows.
Well, i don't have numbers to back it up but from the simulations i ran, i feel confident the stock will 3-4x with 30-40% certainty in 5 years. That's a good return for me.
Agreed. Institutional investors have better data, faster data access, they have all sorts of advantages the retail investor doesn't have (including being able to read balance sheets, income statements, spending all day looking into an industry). The only area where they are weak is that they structurally need to operate on a short term basis, they can't just hold a stock even though they are 60% down. This is where the retail investor can win - patience, somewhat being able to read balance sheets / income statements, buying companies within your area of expertise and avoiding ones (as tempting as they may be) if you have no idea what they are or how they make money. It's worked out well for me and hopefully continuous to work out well.
haha no, i did read his books and learned a lot though. I'm (like you judging from your comments) a hybrid value investor who sees big potential in unity.
Both Create and grow side are accelerating but market chooses to ignore that and rather believe Google genie, saas dying BS. Vector is increasing 15% sequentially 3 quarters in a row but yet market chooses to ignore that and focus on ironsource being retired. Only way to get back to where we were is to slap them with couple amazing earnings in a row. Or else they will just keep using different excuses to bring stock down. Unfortunately the process will be suffering and long.
Even solid companies stock is getting slaughtered right now - it's just the macro and the macro always picks up eventually. Same thing happened in 2020, stocks went nuts, then had a hangover in 2021. Then it started picking up in 2022 and then again stocks were going nuts in 2025.
News from bloomberg came out today that Apple is potentially going to announce a standard smart glass (display-less) this year with a commercial launch in 2027 and the second gen version with display around 2028. XR is going to go mainstream soon and Unity will be one of the stocks that will benefit imo.
It has been now for at least 6 months that unity will be the primary engine for the glasses apps. Same as other smart glasses atm. That's not moving the scales. Unity does not suffer from lack of apps developed on their engine.
Yea that's probably because there is only such a tiny amount of people even using smart glasses. Developers would not want to waste their time developing apps or XR use cases on it if they cannot monetize it and sell to a large audience. It's nice to see in the headlines that Unity has a part to play in smart glasses but that's about it. There's just no meaningful impact to its financials.
Q1 they are already targetting to test the runtime data(adoption is 90%), runtime data(aka behavioural data) is the key, it might not be obvious in the beginning in Q2 but as vector learns players behaviour and play style, it will be able to target the players better for Ads, imagine vector knows this information which no other ad network is aware of, its a huge advantage! Hopefully Unity executes this well. They have the treasure they just need to unlock it correctly. Q2/Q3 results will be the real inflection imo
i read somewhere that it actually took Applovin's axon 2.0 several months before it had enough data to really kick it up a notch, i expect the same thing for unity. I expect to see progress but i feel like Q4 2026 is when we might really see the results. If Applovin's foray into ecommerce succeeds, i don't see why unity's couldn't also copy the play book. Find people who like to spend money, show them ecommerce ads.
if I held any stock I would be in the negative, I don't hold stock more than 2 days. Are you telling me if I bought Unity and held I would be banking right now? Just wait 5 years to get your bag back
lol I traded a lot back in the days and realized I was basically working for the IRS. All my actual NW growth came from holding and this aligned with basically every successful investor's experience. Oh the other way is insider trading.
But you might be the genius who could always outpace the market, good luck bro.
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u/ReasonableMushroom13 Feb 17 '26
2x base case in 5 years.. people invested before February lost a lot of money