AppLovin's Soaring Stock: Sizzling Growth Ahead?
Stock of AppLovin Rises Following Praise from Wedbush for Its Impressive Advertising Business Performance
Thursday saw a surge in the stocks of adtech firm AppLovin (APP) as analysts raised their price targets following some impressive quarterly results. With the shares up over 13%, the company's stock has more than quadrupled in value over the past year.
Jefferies analysts believe "the fastest growth still lies ahead" for AppLovin, known for monetizing gaming apps with targeted ads. The firm estimates AppLovin's platform serves fewer than 1,000 web-based advertisers, just 0.1% of the total addressable market, hinting at enormous growth potential. Jefferies uplifted its price target from $460 to $530. UBS and Wedbush are equally bullish, with the latter maintaining a target of $620, claiming the advertising business "continues to amaze."
Though the stock has seen a tough beginning to the year due to allegations of "scammy" practices by short-selling firm Muddy Waters and two others, analysts seem undeterred, with UBS asserting that these short-seller reports could momentarily impact both investor sentiment and advertisers' willingness to explore APP as a new channel.
Here's a roundup of AppLovin's stellar Q1 2025 performance:
- Revenue: $1.48 billion, up 40.3%.
- Net cash from operating activities: $832 million.
- Free cash flow: $826 million.
- Adjusted EBITDA margins: Improved significantly in the advertising and apps segments.
- Share repurchases: $1.2 billion.
AppLovin recently announced a strategic shift, divesting its mobile gaming business to Tripledot Studios for $400 million. As a result, the company will focus solely on advertising technology, leaning on advancements in AI and data analytics to boost customer acquisition and monetization. Analysts' consensus price target for 2025 is around $432.90, reflecting a potential 56.4% gain, with some forecasting an 82.4% increase.
Though allegations from the short-selling firms create some uncertainty, market reactions and analyst responses suggest that investors view these concerns as manageable for now.
- The trading of AppLovin's stock witnessed a significant surge Thursday, following impressive quarterly results.
- Analysts, including Jefferies, UBS, and Wedbush, are bullish on AppLovin's future growth, and have raised their price targets.
- Jefferies uplifted its price target from $460 to $530, indicating that they see immense potential in AppLovin's token-based advertising apps.
- Although the stock has faced challenges at the start of the year due to allegations of questionable practices, analysts remain undeterred and view these concerns as manageable.
- AppLovin's Q1 2025 performance showed remarkable growth in various areas, including a 40.3% increase in revenue, significant improvements in Adjusted EBITDA margins, and substantial share repurchases.
- Despite the recent divestment of its mobile gaming business, AppLovin's focus on advertising technology, backed by advancements in AI and data analytics, has analysts predicting the company's stock to potentially gain 56.4% by the end of 2025.
