In the wake of two IPOs with prices above the high ranges, Unity raised the value of its upcoming debut this morning. The famous unicorn is currently set to start trading this Friday, with prices after Thursday’s bell.
If that happens, the gaming platform company expects a value of between $ 44 and $ 48 per share, compared to the previous IPO price range of $ 34 to $ 42 per share it had initially set.
Unit increasing its price range for its IPO is no surprise, as software companies have had a strong run in recent times. Just last night, concerns about developer-centric JFrog software and data-centric cloud operation Snowflake valued their public debuts above the high price ranges.
There is a lot of demand for growth-oriented software stocks in public markets today. And Unity has what investors generally look for within that industry: revenue growth of over 40%, gross margins between the 1970s and 1980s, and decreasing losses in both revenue percentage and terms. of gross dollars.
At $ 48 per share, Unity would sell $ 1.20 billion of shares and be valued at around $ 12.6 billion. Given the most recent quarter revenue ($ 184.3 million) and the annualized operating rate ($ 737.4 million), Unity is worth approximately 17.1 times the revenue. (You can increase the multiple by using a final revenue metric instead of an annualized run-rate statistic, or decrease it by using a forward revenue estimate.)
We will get a better idea of how hot the public markets will be later today when Snowflake and JFrog begin, but Unity’s rising prices bode well for all three companies. Unit investors are bound to do well, regardless of the final price. The company last raised $ 125 million in mid-2019 with a valuation of around $ 6 billion. Previous shareholders will do even better in the transaction.
Sumo Logic is also expected to debut this week. Read more about that IPO here, if you’re so inclined.