BUZZ-Unity Software slips after upsized $600 mln convertible deal priced

Unity Software's U.N shares down 2.4% at $26.62 in premarket trading after video-game software maker secures capital raise

San Francisco-based firm late Mon announced pricing offering of $600 mln 0% convertible bonds (CBs) due 2030

Initial conversion price of $36.15 represents 32.5% premium to stock's last sale

U shares fell 3.7% on Mon after co unveiled $500 mln offering with plans to repurchase $500 mln of its 0% 2026 CBs, among other purposes

On Thurs, shares surged ~30% to close at $28 after co posted smaller-than-expected Q4 loss of 30 cents/sh vs LSEG estimate of 37 cents/sh, and said it will begin rolling out its new GPU-enabled AI advertising algorithm at the end of this current qtr

Reacting to the news, multiple brokerages raised their PTs, including Morgan Stanley, BofA, Wells Fargo and Needham

Morgan Stanley, which rates U 'overweight', went from $26 to $32, saying earlier-than-expected Vector roll-out is a "clear catalyst to reaccelerate the ad business by delivering stronger ROAS (return on ad spend)"

Avg rating among 27 brokerages covering U is "buy"; median PT of $27 up from $23 a month ago and from $21 on Nov 25, per LSEG data

Shares up 21% YTD through Mon, following 45% drop in 2024