Credit Suisse Cuts Applovin Price Target Factoring In Macro/Sector Headwinds

Credit Suisse analyst Stephen Ju cut the price target on Applovin Corp APP to $80 from $100 and reiterated an Outperform ahead of quarterly results.
Given the ongoing weakness in the mobile gaming market, the analyst decreases his 1P-related estimates on consumer spending and in-app advertising.
More importantly, with the announcement of the proposed merger of two of its most direct competitors, Ju could see an increase in competitive intensity.
And from the standpoint of macro headwinds in general for the advertising sector, the analyst cut his Software Platform estimates as well, with 2022 starting as a lower baseline for growth.
Overall, APP intends to operate the businesses separately and focus on greater profitability (~20% EBITDA margins) in 1P.
The rating reflected 1) operations in the fastest-growing segment in videogames, 2) software to offer more diversified exposure to mobile games secular growth theme, and 3) optionality to expand TAM to non-gaming apps.
Price Action: APP shares traded higher by 10.61% at $40.33 on the last check Monday.

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