Why Unity Software Stock Plunged 17% in December
Shares of Unity Software (NYSE: U) plunged 17.1% in December, according to data provided by S&P Global Market Intelligence. A large portion of this drop occurred immediately after the company announced the completion of its acquisition of Weta Digital. But the bigger reason for December's underperformance may have simply been general market conditions. Stocks with more aggressive valuations, like Unity, took a haircut during the month. And it's something that's continuing so far in January.
Unity is a software platform for creating and monetizing 3D digital content and is often used by video game companies. So it might have surprised some to see it go out and acquire Weta Digital, a special-effects company involved in making TV shows and movies. Weta was used in making films well known for their special effects, including Avatar and the Lord of the Rings trilogy. Therefore, given Weta's accomplishments, it makes sense that Unity might want to own its software tools.
Image source: Getty Images.
Source Fool.com
