Unity Software To Reportedly Cut 25% Workforce Affecting 1,800 Employees Amid Recovery Efforts

9 months ago

In a bid to recuperate from a turbulent period, Unity Software Inc. (NYSE:U) has decided to lay off approximately 25% of its workforce.

What Happened: The software company, based in San Francisco, plans to part ways with about 1,800 employees, as reported by The Wall Street Journal.

This announcement comes after the company faced a significant backlash from customers last fall due to the introduction of new fees, which resulted in the departure of its CEO, John Riccitiello.

Transcript

00:00 Unity announced it is laying off, what was it? 25% of its workforce. 1,800 employees,

00:08 as you can see here, the headline in Benzinga Pro. Now, you've been in the markets a little

00:13 longer than I have, Dennis, but if it were me and I'm just going based off this and I

00:17 hear a company's laying off 25% of its workforce, that's not a company I'd want to go out and

00:22 buy, but I'm clearly in the minority here because the Unity stock is up 2.3% yesterday

00:28 after closing up more than 3% yesterday. I mean, is this the type of market we're in

00:36 where when a company's announcing layoffs, they're doing some cost-cutting measures?

00:40 Look at what happened with Meta last year. Meta laid off a bunch of staff last year and

00:45 the stock, that's not why the stock retired, but it continued to do well. I mean, would

00:49 you be buying this down here amid these layoffs?

00:53 It's been, and you're making an accurate assumption here, it's been this type of market where

00:58 they have a plotted job cutting because obviously getting the cost down because they know demand

01:03 has stayed strong. The problem here, not just with Unity, but the problem going forward

01:09 is demand is teetering in some areas here, and we've talked about this economy potentially

01:15 going into a recession. I've kind of taken the recession camp out because I believe the

01:19 Fed won't allow it to happen. That's the only reason, but you can see there's tweaks here

01:24 in the economy. You can see Canada's been in a recession here for the last six months.

01:29 Two negative quarters of GDP can feel slower in Canada. Not like it's crazy, like everything's

01:34 collapsing. Jobs are still strong here. You can still get a job, but we're in a light

01:40 little recession here in Canada. The US would naturally want to go into that. Rates would

01:45 start to bring us into it, but I do believe that the Fed will not allow that to happen,

01:50 which is why I don't think we're going to go into a recession. But there's certain pockets

01:52 here where we're starting to see demand just teeter just a little bit here. So multiple

01:58 warnings last night. Let's take it outside the US first. You got Samsung, which is warning

02:02 overseas, but then take it back here. You get microchip warning. Unity does 25% layoff

02:10 to the workforce. When you lay off 5%, it's cost cutting. When you're laying off 25%,

02:14 it's usually because it's a demand issue here. So I wouldn't be surprised if Unity actually

02:18 ends up trading in the red here today. On this, I still have a small, small piece of

02:23 this. I had a bunch of stock and I sold it. I have a small piece left. This company just

02:28 doesn't seem well managed, though. So I'm almost thinking of just dumping the rest of

02:31 it just to be done with this. I might move it into other things. And I'll tell you those

02:35 other things I'm moving into because I'm going to unveil a new trading acronym here today.

02:39 But just taking it back here, I think we can't just sit back and say, yeah, cost cutting

02:45 measures, this is going to be the way that this economy is going to, or the way stocks

02:52 are going to continue to rally when they're laying off 25% of their workforce. I think

02:56 we're going to move into a different type where you start seeing layoffs because of

03:00 demand issues and those stocks probably start to get hit.

03:03 Yeah. And I think you brought up a good point there, Dennis, where you said you could start

03:09 to feel the economy slowing in Canada, which when we're talking about these macro things,

03:13 the economy, it's what it does. It goes through these cycles where it's in a boom cycle and

03:17 then might slow down. But I think it's important to recognize that you can have some of these

03:22 downturns where there might be some slowing without it being this massive crash.

03:27 I think the '07-'08 financial crisis has altered our perception where any slowdown

03:34 in the economy, people freak out and think we're going to see this huge massive recession

03:38 and market crash and sell all stocks. Whereas I'm like, no, that's normal. You're going

03:43 to see the economy slowing sometimes.

03:45 Ebbs and flows.

03:46 Ebbs and flows. Exactly. So I think it's important to be able to play these without going straight

03:50 to that doom and gloom scenario.

03:56 I want to stop you right there because it's something that we don't often say on the show.

04:01 And when I say something bearish, people think it's all doom and gloom. And when I say something

04:05 bullish, people always take it to the extremes. What you just said perfectly encompasses what

04:12 trading is all about. Trading those ebbs and flows and not going full on, oh, it's going

04:18 to be Harry Dent. We're going to have an 80 percent crash this year or Peter Schiff calling

04:23 for the crash for the umpteenth time.

04:26 If you're saying something bearish and you know, you're as a trader, you need to be able

04:31 to trade both ways. You as a day trader, I'm not speaking to you long term investors. If

04:35 you're a long term investor, buy good companies at reasonable valuations.

Unity Software To Reportedly Cut 25% Workforce Affecting 1,800 Employees Amid Recovery Efforts

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