Why Unity Stock Is Soaring Today

Unity (NYSE: U) stock is making big gains in Thursday's trading. The software company's share price was up 8.8% as of 11:30 a.m. ET. Meanwhile, the S&P 500 (SNPINDEX: ^GSPC) was up 0.1%, and the Nasdaq Composite (NASDAQINDEX: ^IXIC) was up 0.2%.

Unity stock is surging today following a recent post by Keith Gill, better known by his online handle "Roaring Kitty." Investors are betting that Gill is backing Unity as one of his next big stock plays and that more explosive gains could be on the horizon.

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Unity stock surges thanks to the latest Roaring Kitty post

Yesterday, Gill posted a short video on his Roaring Kitty account on X featuring comedian Dave Chappelle in character as musical artist Rick James. The clip is from a skit that features Chappelle's Rick James character and makes reference to the singer's song "Unity."

In videos and posts under his Roaring Kitty accounts, Gill was one of the strongest advocates for GameStop stock ahead of its incredible bull run. Gill's coverage of the stock helped power an incredible valuation run for the video game retailer, and he was one of the most visible figures in the extreme bull market for meme stocks that kicked off at the beginning of the decade.

Investors who bought GameStop early in Gill's coverage cycle had opportunities to sell for massive gains after meme stock momentum helped kick off an incredible short squeeze. Thanks to his wins with the stock, many investors still pay close attention to his moves and comments.

What comes next for Unity stock?

With Unity stock potentially being referenced by Roaring Kitty, it's possible that the company's share price will benefit from more meme stock momentum in the near term. But while meme stock-oriented trading could be the stock's biggest catalyst in the very near term, there's actually a strong fundamentals case for investing in the software specialist.

Even with today's surge, Unity stock is down roughly 41% over the last year. Meanwhile, the gaming and content-creation specialist has been moving forward with its turnaround strategy under new management. Sales were down 2% year over year to $429 million in the third quarter of 2024, but subscription revenue increased 12% compared to the prior-year period -- and free cash flow rose 11% to $115 million. Even though the stock is getting a lift from meme traders at the moment, it also deserves a close look from other investors.

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Keith Noonan has positions in Unity Software. The Motley Fool has positions in and recommends Unity Software. The Motley Fool has a disclosure policy.