AppLovin Analyst Fears Competition From Meta, Google, Apple

Needham analyst Bernie McTernan initiated coverage on AppLovin Corp APP with a Hold rating.
The company's robust organic revenue growth over the past two years was driven by its best-in-class AXON machine-learning platform executing strongly in a favorable operating environment.
While he expects a still-commendable 25% organic revenue CAGR over the next two years, he does not foresee a catalyst that will boost the stock's adjusted EBITDA multiple (7.5x his NTM estimate).
He anticipates greater competition from Meta Platforms Inc META, Alphabet Inc GOOG GOOGL Google, and increasingly Apple Inc AAPL.
He believes AppLovin will benefit from the shift in monetization in mobile apps toward in-app advertising (IAA) and the re-valuing of first-party consumer data.
AppLovin has built and acquired the necessary tools and data to drive user acquisition and subsequent in-app ad monetization for its software clients.
He thinks there is a further runway in in-app advertising for ad load in casual gaming apps, which would create a blueprint for non-gaming apps to follow.
He also thinks that the breadth of potential advertisers will grow as brands realize the potential value of gaming app users.
Further, he sees other form factors beyond mobile phones where AppLovin's flywheel can drive similar results, such as connected TV.
Price Action: APP shares traded lower by 9.2% at $18.65 on the last check Friday.

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