Unity Software Stock Is Moving Lower Monday: What's Going On?

Unity Software Inc U shares are trading lower Monday after the company announced a proposed offering of convertible senior notes.

What Happened: Before the market open on Monday, Unity announced plans to offer $500 million of convertible senior notes due 2030 in a private placement to institutional investors. The company also granted the initial purchasers a 13-day option to purchase up to an additional $75 million of the notes.

Unity expects to use the net proceeds from the offering to pay the cost of the capped call transactions, to repurchase for cash its 0% convertible senior notes due 2026 and for general corporate purposes, which may include acquisitions or strategic investments in complementary businesses.

The offering comes after Unity reported fourth-quarter financial results last week that came in ahead of analyst estimates. Unity reported revenue of $457 million versus estimates of $433.17 million, and an earnings loss of 30 cents per share versus estimates for a loss of 37 cents per share.

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Unity guided for first-quarter revenue of $405 million to $415 million versus estimates of $439.54 million. Despite the soft guidance, multiple analysts raised price targets on the stock following the print.

Barclays maintained an Equal-Weight rating and raised its price target from $18 to $26, Needham maintained a Buy rating a raised its price target from $26 to $33, Wells Fargo raised its target from $20 to $27 and Morgan Stanley maintained an Overweight rating and raised its target to $32.

Unity said it had approximately $1.53 billion in cash, cash equivalents and restricted cash as of Dec. 31.

U Price Action: Unity shares were down 4.73% at $27.00 at the time of publication Monday, according to Benzinga Pro.

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