On Thursday, BTIG updated its outlook on AppLovin Corp (NASDAQ:APP) shares, raising the price target to $114 from the previous $100, while maintaining a Buy rating on the stock.
The firm's positive stance is based on recent checks in the second quarter of 2024 within the Gaming Advertising segment, which have led to an increased estimate for AppLovin's future performance.
The company is poised for a robust growth trajectory, with expectations of approximately 20% revenue growth in its software segment through 2025, largely fueled by its gaming operations. AppLovin is seen as a key driver in the growth of user acquisition spend within the industry.
The firm anticipates that AppLovin will successfully attract increased budgets from small to mid-size publishers and continue to gain market share among large publishers.
The confidence in AppLovin is not solely tied to its gaming business. Feedback from non-gaming customers has been positive, with significant organizations reporting strong performance and plans to increase their budgets.
This indicates potential for AppLovin to grow its non-gaming customer base, although major scaling in this area is not expected to be a necessity for investors to consider until beyond 2026.
Despite the complexity of the business and a performance that has made investors cautious throughout the year to date, BTIG views AppLovin as a favorable long-term investment.
The firm has identified AppLovin as one of its top picks for the second half of 2024, suggesting that the potential upside in both the company's financial performance and its stock price justifies the due diligence and investment.
In other recent news, AppLovin Corporation has reported a notable surge in its Q1 2024 financial results. The company's total revenue reached a significant $1.06 billion, marking a 50% increase from the same period in the previous year. This growth is primarily attributed to the strong performance of AppLovin's software platform, which saw a revenue increase from $355 million to $678 million in a single year.
The company's advancements in its AXON model and expansion into non-gaming verticals, such as web-based marketing and e-commerce, have been instrumental in driving this growth. In addition, AppLovin announced a 20% reduction in total shares outstanding through share repurchases, indicating confidence in its growth trajectory.
AppLovin anticipates continued growth in both the mobile gaming market and new verticals, with AI technology central to its strategy for expanding reach and improving performance advertising.
The company's CEO, Adam Foroughi, emphasized its strategic focus on leveraging AI to access more customers and its unique position in the connected TV market. These are just some of the recent developments for AppLovin Corporation.
InvestingPro Insights
As AppLovin Corp (NASDAQ:APP) gains traction in the market, InvestingPro data highlights a few key metrics that may interest investors. The company's market cap stands at a robust 26.38 billion USD, signaling a strong market presence. Despite trading at a high earnings multiple with a P/E ratio of 51.19, the company's revenue growth remains impressive at 24.72% over the last twelve months as of Q1 2024, with a remarkable quarterly revenue growth of 47.9% in Q1 2024. Additionally, AppLovin's gross profit margin is substantial at 69.9%, indicating efficient operations and profitability.
From the array of InvestingPro Tips, two stand out as particularly relevant to the current discussion. Firstly, management's aggressive share buybacks can be a sign of internal confidence in the company's value and future prospects. Secondly, analysts are not only expecting net income to grow this year but also predicting sales growth in the current year, which aligns with the positive outlook presented by BTIG.
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