Unity Software: Measure Twice!

Silver Lake and Saudi Arabia's Public Investment Fund are reportedly in talks to acquire Unity Software (U) at an initial valuation of $25 billion, or roughly $55 per share. The Motley Fool argues the figure undervalues the company.

The case for a higher price rests on Vector, Unity's AI advertising engine, which grew 126% year over year. Unity also posted its first GAAP profit alongside 32% revenue growth. The company's 3 billion monthly players supply training data for Vector, which the Motley Fool frames as a durable edge for the engine.

The analysts put fair value near $33 billion, about 32% above the reported $25 billion opening figure. They recommend the board hold out for more if a formal offer materializes, and they say they are content holding shares in an independent Unity.

Interpretation: the gap between $25 billion and $33 billion defines the likely negotiating range. Because the $25 billion number is described as an initial valuation, the opening bid may leave room to move, though the report does not say a deal is imminent or that terms are final.