Is Unity Software a Good Buy?

1)  The market has undervalued Unity's acquisition of ironSource.  Unity's top line has grown 40% YoY for the past few years as Unity has focused on the aggressive acquisition of new clients.  ironSource provides Unity with the means (advertisement software) to strengthen Unity's EBITDA margin and bottom line by providing much needed alternative monetization avenues.  An all-stock transaction valued at $4.4B is not ideal, but is worthwhile given that it would save Unity from being the equivalent of Twitter (a high growth yet unprofitable company)

2)  The market has undervalued Unity's position in the game engine market.  In 2020, 93 of the largest 100 game studios used Unity.  Competitors would find it difficult to displace Unity as THE primary game engine provider in the market.

3)  Unity has a FORTRESS balance sheet given its growth company status.  Unity has a current ratio of around 3.5x, a D/E of 77%, and 1.1B of cash in its war chest.  Given the most bearish scenarios, Unity has the capital to holdout and eventually grow in the future.

Once a recession occurs or the risk a recession dimishes, the current bear market will end, allowing Unity to trade at similar multiples as seen during the pandemic.