
Unity Software (U) stock has recently experienced a notable rally in its share price, driven by a significant block trade and increased social media activity - particularly involving a post by Keith “Roaring Kitty” Gill. While the post was characteristically cryptic, many users have found possible ties to Unity stock, sending U to a gain of more than 12% to kick off January.
Despite this positive market reaction, the company has faced a challenging year, with its stock declining by 39% in 2024, in stark contrast to the substantial gains of its competitor, AppLovin (APP). Given that, the recent surge in Unity’s stock price appears to be influenced more by speculative trading than by new fundamental developments.
The Relative Strength Index (RSI) daily value of 58 suggests that Unity stock is not yet overbought, which means there could be more upside left to this breakout. Volume has spiked significantly, with over 13 million shares traded in the first hour of Jan. 2, highlighting increased market activity. The 200-day SMA at $20.59 remains a distant support level, reflecting the stock's recovery from its previous lows, and U is now looking to close the session above its 20-day moving average.

Unity's financial performance has been mixed, with third-quarter revenue exceeding expectations but earnings falling short. The company's full-year revenue guidance for 2024 was lower than analysts' forecasts, contributing to a cautious financial outlook. Analysts are closely monitoring upcoming earnings reports, with expectations of a significant decline in both earnings per share (EPS) and revenue compared to the previous year.
Despite these challenges, there have been no recent changes in analysts’ EPS estimates, and the stock has a consensus rating of “Moderate Buy” among the 19 analysts in coverage. However, investors may want to proceed with caution, as social media and meme culture continues to play a significant role in Unity's price action.
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