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Unity’s Stock Rebound Collides With Fresh Warnings on Dilution

Analysts urge waiting for a slowdown in share issuance to protect per‑share gains.

Overview

  • Unity’s outstanding share count has climbed about 62% since its 2020 IPO, driven by a late‑2022 stock‑funded acquisition and sizable stock‑based compensation.
  • Over the past year, stock‑based compensation exceeded 20% of revenue, reinforcing investor concerns about ongoing dilution.
  • The shares have surged roughly 110% over the past year to around $49, yet IPO investors remain slightly underwater.
  • For Q3 2025, Unity posted a surprise adjusted profit of $0.20 per share versus a projected $0.24 loss, with revenue at $471 million and free cash flow of $151 million.
  • After developer backlash, the company scrapped its proposed runtime fee in early 2024 and pivoted into AI‑powered advertising with Unity Vector.