Amidst increasing losses, Investors bid up Unity Software (NYSE:U) 6.9% this past week

Unity Software Inc. (NYSE:U) shareholders will doubtless be very grateful to see the share price up 45% in the last quarter. But that doesn't change the fact that the returns over the last year have been disappointing. Specifically, the stock price slipped by 61% in that time. Some might say the recent bounce is to be expected after such a bad drop. It may be that the fall was an overreaction.

While the last year has been tough for Unity Software shareholders, this past week has shown signs of promise. So let's look at the longer term fundamentals and see if they've been the driver of the negative returns.

Check out our latest analysis for Unity Software

Because Unity Software made a loss in the last twelve months, we think the market is probably more focussed on revenue and revenue growth, at least for now. Shareholders of unprofitable companies usually expect strong revenue growth. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.

In the last year Unity Software saw its revenue grow by 24%. That's definitely a respectable growth rate. Unfortunately it seems investors wanted more, because the share price is down 61% in that time. It is of course possible that the business will still deliver strong growth, it will just take longer than expected to do it. To our minds it isn't enough to just look at revenue, anyway. Always consider when profits will flow.

The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).

Unity Software is well known by investors, and plenty of clever analysts have tried to predict the future profit levels. You can see what analysts are predicting for Unity Software in this interactive graph of future profit estimates.

A Different Perspective

Unity Software shareholders are down 61% for the year, even worse than the market loss of 7.6%. There's no doubt that's a disappointment, but the stock may well have fared better in a stronger market. It's great to see a nice little 45% rebound in the last three months. This could just be a bounce because the selling was too aggressive, but fingers crossed it's the start of a new trend. It's always interesting to track share price performance over the longer term. But to understand Unity Software better, we need to consider many other factors. Take risks, for example - Unity Software has 4 warning signs we think you should be aware of.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of companies we expect will grow earnings.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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