Shares of game engine developer Unity Software (NYSE:U) jumped nearly 6% in the morning session today after the company disclosed plans for office closures and a decrease in its headcount.
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Unity has committed to closing offices in nearly 14 locations as it takes a second look at its real estate footprint. It expects to incur a majority of the costs and charges associated with this move in the fourth quarter of Fiscal Year 2023 and the first quarter of Fiscal Year 2024.
With a focus on its core businesses, Unity has terminated some of its obligations to visual effects company Weta FX and amended certain property rights between the two companies. The move is expected to result in $141 million in deferred revenue and additional consideration. In addition, the company will need to recognize a $131 million cost for the value of a “contract intangible asset”. Weta FX was founded by Peter Jackson, the director of Lord of the Rings.
Additionally, Unity is slashing 265 positions globally, according to Reuters. This slew of changes comes amid a multitude of challenges for Unity. Its recent third-quarter performance disappointed investors, and a change in pricing structure to a per-installation model drew criticism from creators.
What Is the Prediction for Unity Stock?
Despite today’s price gains, the stock still remains nearly 13% lower over the past year. Overall, the Street has a Moderate Buy consensus rating on Unity and the average U price target of $30.17 points to a 2% potential downside in the stock.
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