Wedbush Cuts Unity Target 18.9% to $30, While Vector Ads Grow 72%
Wedbush cut its Unity target by 18.9% to $30 after Q1 revenue guidance of $480–490m missed estimates and AI concerns, despite Q4 revenue rising 10% YoY to $503.1m with adjusted EBITDA climbing 25% to $125m. Vector grew ad revenue 72% YoY, driving forecasts for >$1B quarterly run-rate by end-2026.
1. Wedbush Downgrade Rationale
Wedbush reduced its Unity target price from $37 to $30 (an 18.9% cut) while retaining an Outperform rating, citing escalating AI competition and a strategic shift that tempered its outlook for the gaming engine developer.
2. Q4 2025 Financial Results
Unity reported Q4 revenue of $503.1 million, up 10% YoY, with Create Solutions revenue rising 8% to $164.9 million and Grow Solutions up 11% to $338.2 million; adjusted EBITDA jumped 25% YoY to $125 million.
3. Q1 2026 Guidance Miss
Management projects Q1 revenue between $480 million and $490 million, below the $492 million consensus, implying flat sequential growth and intensifying investor scrutiny over near-term performance.
4. Vector Ad Platform Momentum
The Vector ad platform delivered 72% YoY ad revenue growth in January, underpinning expectations that Unity will surpass a $1 billion quarterly ad revenue run-rate by end-2026.