One of the biggest movers in the tech space over the past two days has been Unity Software (NYSE:U). Shares of U stock surged more than 20% in yesterday’s session on news that Apple (NASDAQ:AAPL) will be working with Unity on game development for its newly-announced Vision Pro augmented reality ( ) headset.
Today, U stock has given up some of these impressive gains, down around 1% at the time of writing. However, given the size of yesterday’s move, some profit-taking and insurance hedges may be expected.
That said, it’s clear that many investors are now looking much more closely at Unity and what the company does after this announcement. Adobe (NASDAQ:ADBE), Cisco (NASDAQ:CSCO) and Microsoft (NASDAQ:MSFT) were all named as additional partners for this ecosystem rollout, and all stocks saw surges yesterday afternoon before giving up some of their gains today.
Let’s dive into what this particular announcement means for investors in Unity Software.
U Stock Gives Up Some of Yesterday’s Impressive Gains
Apple’s focus on creating world-class content for its upcoming Vision Pro certainly makes sense. This model, which was announced yesterday, is expected to become available sometime next year. Accordingly, there’s some runway for developers to get to work in building out a robust app ecosystem for users.
Unity’s “powerful and familiar real-time 3D tools and capabilities” will be made available for the Vision Pro, with the company noting: “Our huge community of passionate developers can bring new and existing Unity-created apps and games to this exciting new spatial computing platform.” The company expects to utilize its proprietary PolySpatial technology, in line with visionOS, to create a suite of core apps for the new platform.
Unity’s key value for platform providers like Apple comes in the company’s focus on integrating in-app advertising into the suite of applications on a given platform. For Apple, generating a stream of advertising revenue from the games on its platform will likely be very important over the long term. While much of the up-front development costs may be subsidized by the relatively high cost of the Vision Pro (around $3,500 a pop), over time, these prices should come down alongside increased advertising revenue. Thus, Unity appears to be a very smart partner for Apple, and investors are right to view this deal as a major catalyst for U stock moving forward.
On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.