Unity Software Inc. (U) shares plummeted 29.77% in pre-market trading on Wednesday, following the release of the company's fourth-quarter financial results.

The sharp decline came despite Unity reporting better-than-expected Q4 2025 results, with adjusted earnings of $0.24 per share beating consensus estimates of $0.20-$0.21 and revenue of $503.1 million surpassing expectations of approximately $492 million. However, investors reacted negatively to the company's guidance for the first quarter of 2026, which fell short of Wall Street forecasts.

Unity issued Q1 2026 revenue guidance of $480 million to $490 million, below the analyst consensus estimate of approximately $492 million. The company also projected adjusted EBITDA of $105 million to $110 million, missing forecasts of around $116.9 million. This disappointing forward outlook, combined with ongoing investor concerns about artificial intelligence tools like Google's Project Genie potentially displacing traditional game-development software, triggered the significant selloff.