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Why Unity Software Stock Spiked Today

By Chris Neiger – Sep 28, 2020 at 11:58AM

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An analyst put a buy rating on Unity late last week, and investors jumped on the stock.

What happened

Shares of Unity Software (U 2.86%) are climbing today after an analyst initiated coverage of the company on Friday with a buy rating. Shares jumped by as much as 10.3% this morning, before settling slightly lower. As of 11:25 a.m. EDT, Unity's stock was up 8.9%. 

So what

D.A. Davidson analyst Franco Granda started his coverage of the stock at the end of last week with a price target of $100. Investors have been excited about Unity ever since the company went public less than two weeks ago, and the buy rating Granda slapped on the stock helped push shares up even higher. 

Since the company's initial public offering (IPO) on Sept. 18, Unity's shares have climbed 43%.  

Red and green graphs on a dark background.

Image source: Getty Images.

Unity makes software that's used by video game publishers and competes with Epic Game's Unreal Engine. Granda believes that Unity's software will not only benefit from the vast gaming industry, but that it also can be used for other purposes, like filmmaking.

Some investors may also be optimistic that Unity may benefit from Epic Games' colossal fight with Apple over in-app purchases. If some companies view Epic as the software creator that's willing to bite the hand that feeds it, they may be more inclined to choose Unity's software, instead.

Now what 

Unity is a young company with a recent IPO, which means that investors can likely expect some big price swings right now. And with one of the company's biggest competitors in a very public legal battle with Apple, it's possible Unity's shares could fluctuate based on news that comes out of that skirmish.

Chris Neiger owns shares of Apple. The Motley Fool owns shares of and recommends Apple. The Motley Fool has a disclosure policy.

Stocks Mentioned

Unity Software Inc. Stock Quote
Unity Software Inc.
$40.64 (2.86%) $1.13

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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