Unity Technologies saw its stock price rise 32% to $68.88 a share in the first day of trading as it launched an initial public offering at a $13.6 billion valuation.
Trading under the symbol U, the stock opened on Friday morning at $52 a share, and the market value rose to $18.1 billion by the end of the day. Unity makes the Unity game engine that developers use to create games and other computer-generated entertainment.
The interesting thing about that $18.1 billion valuation is that Unity is now worth more than Epic Games, its arch rival and the maker of the Unreal Game engine and the successful Fortnite title.
Epic Games is still private, but it has raised money recently. In 2019, Epic Games reported $730 million in earnings on revenue of $4.2 billion, according to information obtained by GamesBeat. Epic recently raised a couple of rounds of funding at a valuation of $17.3 billion. The rounds included $250 million from Sony, which has a 1.4% stake in the company.
While Epic is very profitable, Unity is not. In 2019, the San Francisco maker of the Unity game engine — used by 1.5 million monthly active users to create games and other content — reported a loss of $163.2 million on revenue of $541.8 million. In 2018, the company reported a loss of $131.6 million on revenue of $380.7 million.
For the first six months of 2020, Unity reported a loss of $54.1 million on revenue of $351.3 million in 2019, compared with a loss of $67 million on revenue of $252.7 million in 2019. All told, Unity has lost $569.3 million to date. Unity has about $125 million in debt on its line of credit, and so the IPO money will go a long way toward shoring up the company’s cash as it works toward a profitable business.
The valuation difference between Unity and Epic may just be an anomaly of the public markets, which are exuberant whenever a company goes public.
But Unity is one of the most important technologies in gaming, as software built with its tools runs on more than 1.5 billion devices. Unity said that its platform is used in over 50% of mobile games, PC games, and console games. Its rivals include Epic Games’ Unreal Engine, as well as more specialized engines such as Cocos2d. Unity believes its addressable market is $29 billion across games and entertainment such as TV commercials or animated films. Games made in Unity include Fall Guys: Ultimate Knockout, Township, Ori and the Will of the Wisps, and Oddworld: Soulstorm.