AppLovin's Stock Rallies After Solid Q4 Growth, Underscores Ability To Scale Profitably, Analysts Say

Shares of AppLovin Corp APP were climbing in early trading on Thursday, after the company reported upbeat fourth-quarter results.

The company reported its quarterly results amid an positive earnings season. Here are some key analyst takeaways.

BofA Securities On AppLovin

Analyst Omar Dessouky reaffirmed a Buy rating, while raising the price target from $375 to $580.

The magnitude of AppLovin's fourth-quarter beat was "completely unexpected," Dessouky said in a note. eCommerce is estimated to have contributed around $100 million in revenues in the quarter in addition to the 7% sequential growth in net revenue from mobile game advertisers, he added.

The high end of management's revenue guidance for the first quarter reflects 5% sequential growth, "driven by self-learning in both eCommerce and Gaming models," the analyst stated. "APP’s reported financial performance supports the notion that eCommerce ads work and that revenue could scale to penetrate 10mn+ merchants globally," he further wrote.

JPMorgan On AppLovin

Analyst Cory Carpenter reiterated a Neutral rating, while lifting the price target from $325 to $475.

AppLovin's advertising revenue growth accelerated from 17% sequentially in the previous quarter to 20% in the fourth quarter and came in significantly higher than the guidance of 4%-5%, Carpenter said. Adjusted EBITDA of $848 million represented 78% year-on-year growth and beat the guidance of $740 million to $760 million, he added.

"APP also noted successful early pilots in verticals beyond e-commerce such as fintech, insurance, automotive, and healthcare," the analyst wrote. Management guided to revenues of $1,355 million to $1,385 million, up 29% year-on-year as well as adjusted EBITDA of $855 million to $885 million, up 59%, well above consensus estimates of $1,319 million and $794 million, respectively, he stated.

Benchmark On AppLovin

Analyst Mike Hickey maintained a Buy rating, while raising the price target from $375 to $525.

AppLovin reported 73% year-on-year in advertising revenue growth, Hickey said. The company's first-quarter revenue and AEBITDA guidance came 4% and 10% above consensus, respectively, "fueled by AI-driven ad optimization, non-gaming expansion, and self-serve advertising tools," he added.

"AppLovin is undergoing a strategic transformation, shifting from a gaming-centric ad platform to a pure-play adtech leader with a focus on AI-driven advertising and automation," the analyst wrote. The company's robust performance in the fourth quarter "underscores its ability to scale profitably."

Check out other analyst stock ratings.

Piper Sandler On AppLovin

Analyst James Callahan reaffirmed an Overweight rating, while raising the price target from $400 to $575.

AppLovin continues to execute well across its gaming and non-gaming verticals, while the latter is no longer limited to eCommerce, Callahan said. The company should witness "multiple years of revenue tailwinds from new verticals," he added.

AppLovin announced its plans to sell off the lower-margin Apps segment, "which should simplify the story," the analyst stated. "Management reaffirmed that E-Commerce can be material in 2025," he wrote.  

Goldman Sachs On AppLovin

Analyst Eric Sheridan reiterated a Neutral rating, while lifting the price target from $335 to $500.

The company reported strong operating results and announced the divestiture of its apps (mobile gaming) business, which is likely to close in the second quarter, Sheridan said.

"The company still sees technological advancements (driven by AI and the continued improvements in their AXON 2.0 platform) as driving multiple initiatives for 2025 that can widen the advertiser base, deepen advertiser budget growth, improve self-serve dynamics and result in more ads personalization over the medium/long-term," the analyst wrote.

Oppenheimer On AppLovin

Analyst Martin Yang maintained an Outperform rating, while raising the price target from $480 to $560.

AppLovin has decided to expand beyond ecommerce, Yang said.

"Its adtech solution works well not only for mid-market e-commerce brands, but also for companies in fintech, healthcare, automotive, and insurance, which have seen strong results in the pilot," the analyst wrote. The company will be rolling out a self-service dashboard powered by AI agents this year, "which will allow non-game business to scale faster across industries," he added.

Needham On AppLovin

Analyst Bernie McTernan reaffirmed a Hold rating on the stock.

AppLovin generated advertising revenue "at elevated levels" for two consecutive quarters, with 17.5% growth in the third and 19.7% in the fourth quarter, McTernan said. Its ad revenue growth was "driven by underlying model improvements from the model getter smart, engineering improvements on the models and new verticals revenue helping to drive seasonal strength"

The ad spend from new verticals in the fourth quarter suggest that the pilot program is "off to a strong start," the analyst stated. "The company is working on a gen-AI enabled self service platform that should accelerate new verticals revenue."

APP Price Action: Shares of AppLovin had risen by 23.26% to $468.79 at the time of publication on Thursday.

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