Why Unity Software Stock Was Down This Week

Week to date, shares of Unity Software (NYSE: U) are down 7% as of 11:18 a.m. ET on Friday, according to data provided by S&P Global Market Intelligence. The fall seemed mostly correlated with the drop across the market indexes this week. Fears mounted of a pending recession after the Federal Reserve decided to raise the federal funds rate to stem the upward pressure in inflation.

As for Unity, one analyst downgraded the stock this week to a sell rating, which contributed to the stock's drop. However, the negative sentiment around the shares might be a great buying opportunity for long-term-minded investors.

Unity stock dropped sharply following the first-quarter earnings report. Revenue increased by 36% year over year, consistent with management's long-term target of 30% annualized growth. But second-quarter guidance called for revenue to increase between 6% and 8% over the year-ago quarter, and that sent the stock crashing to new lows. Management explained during the earnings call that the problems contributing to slower growth in the near term are self-inflicted wounds that it will fix.

Source Fool.com