Rachel Warren

So I think in the long run, I think the economy is going to come back stronger than ever.

I think consumer spending power is going to improve.

But I don't think that we can ignore these short-term indicators and what they mean for consumers and for a range of businesses.

Very, very strong response from the market.

I think a lot of this is being driven by the board guidance they gave, which investors saw broadly as disappointing.

I think they're still intensifying fears of AI-driven disruption.

Their forecast for Q1 revenue, between $480 million and $490 million, that was a bit below Wall Street's consensus estimate of about $494 million.

They also fell a bit short of Wall Street's expectations for their Q1 adjusted EBITDA forecast.

A lot of this suggests that they're seeing a slower ramp up for Vector.

Vector is Unity's AI-powered advertising tool.

They're looking at flat growth for their Unity 6 subscriptions in Q1.

All of these are reasons why investors seem to be responding the way they are.

The other big thing that's happened recently, and this was where we saw the stock plummet in late January, was after Alphabet's Google unveiled project

It's basically this generative AI prototype that can create interactive world models.

This sparked some fears that Unity could be rendered obsolete.

Unity is still unprofitable, but their revenue is growing.

They're in a good position cash-wise.

I do think the price reaction is a bit of a knee-jerk response to AI uncertainty.

I'll note, AI world models are likely to expand, at least in my view, Unity's addressable market rather than replace it, especially because you're at a place where professional game development really remains highly complex.

They really need that platform that Unity has to monetize and advertise their games.