Unity (U) stock fell on Tuesday after the video game engine developer started layoffs across its various teams. The exact number of cuts is unknown as employees only started being notified about the headcount reductions this morning.
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The biggest casualty of the Unity layoffs appears to be the company’s Behavor team, which was completely nixed in these cuts. This group was responsible for developing tools affecting the behavior of non-playable characters (NPCs) in the Unity game engine.
Unity has been struggling for years and one of the biggest hammers nailing its coffin shut was a change to runtime fees in late 2023. This changed how it charged game developers who used its engine, seeking fees for downloads and installs, rather than just purchases. This upset many video game developers, resulting in boycotts. While Unity did alter its fee change, it didn’t regain favor with developers.
What This Means for U Stock
News of the layoffs hit U stock hard today, causing a 3.68% drop as of this writing and continuing its 12.15% decrease year-to-date. Investors still holding U stock are likely used to this manner of movement as Unity posts more losses than wins. This has its shares down 42.11% over the last year and 81.04% over the last three years, showing the damage done by its runtime fee change.
Is U Stock a Buy, Sell, or Hold?
Turning to Wall Street, the analysts’ consensus rating for Unity is Moderate Buy based on three Buy, three Hold, and one Sell ratings over the past three months. With that comes an average price target of $21.75, a high of $26, and a low of $15. This represents a potential upside of 10.91% for U stock.
