Unity Software (U  ) shares were slightly lower after the company missed analysts' expectations on the top and bottom lines. The platform for video game developers continues to see double-digit revenue growth, but it's dealing with the same macro issues as other video game companies in terms of lower ad spending and a decline in time spent gaming.

Unity had been one of the premier growth stocks during the massive sling-shot move higher for the group from 2020 to 2021 as the Fed aggressively eased policy and other factors conspired to form a market bubble. From Unity's IPO in October 2020 to its peak in November 2021, the stock nearly tripled. Since then, it's down by 84%.

The stock was loved by growth investors during the period of low rates and accelerating growth. Now, we have high rates and growth that could fall into the single digits in 2023. The company's initiative for its platform to be used for rendering 3D experiences for other mediums is also off to a slower-than-expected start.

Inside the Numbers

In Q3, Unity reported a loss of $0.88 per share which was wider than expectations of a loss of $0.79 per share. Revenue came in at $323 million which was below analysts' estimates of $328 million. In total, revenue was up 13%, while the company's net loss doubled from last year's Q3.

In Q4, Unity is forecasting revenue between $425 million and $445 million. It also slightly increased its forecast for full-year revenue to $1.38 billion from $1.3 billion in the previous quarter. Both figures were above analysts' estimates and offset some of the stock's weakness following the earnings miss.

On the conference call, the company stressed that it continues to achieve its longer-term targets despite the near-term bumps in the road. The company also recently closed a $4.4 billion acquisition of IronSource that it believes will strengthen the company's platform and make it a more formidable competitor in the ad market.

Another development is that Applovin's (APP  ) $20 billion attempt to buy out Unity seems dead in the water. The biggest factor is the collapse in Applovin's stock as it's now a fraction of Unity's total value. It's also likely that long-term Unity shareholders would object to the proposal given that it's only 50% above the current price and below its IPO price.