Shares of AppLovin, a mobile advertising technology company, have soared in 2024 and many on Wall Street expect that record rise to continue into the new year. AppLovin shares rose 713% last year, the best performance since it went public in the spring of 2021, as the Palo Alto-based company benefited from online advertising and the growth of artificial intelligence. Even after the market cap soared to $117 billion at Thursday's close, Wall Street remains bullish on the Adam Foroughi-led company, with more than three-quarters of analysts maintaining a buy or overweight rating on the stock, according to FactSet. The average 12-month price target indicates an upside of 10% from current levels. APP 1Y Mountain AppLovin's stock over the past year “this could be just the beginning of what's to come,” BTIG analyst Clark Lambin said. How AppLovin Works AppLovin is a mobile technology company founded in 2012 that went public through a special purpose acquisition company in 2021. It primarily caters to mobile game developers, enabling them to acquire new users and increase revenue. “The fundamental secret sauce that unlocks a lot of this for AppLovin is the ad algorithm,” Lambin explains. Lampin said last year's success stemmed from changes to that targeting algorithm, known as AXON, in 2023. The revamp resulted in improved conversion rates, opened new customers, and increased ad spending by customers. Wedbush's Michael Pachter notes that these changes came amid the rollout of Apple's ID for Advertisers (IDFA) privacy changes, which impact how companies access user data. With the new setup, it's estimated that AppLovin now gets twice as much business from each ad than it did before. This, coupled with continued gains in gaming — where the company dominates — along with a new e-commerce pilot program, also helped lift the stock in 2024, BTIG's Lampen said. What to expect in 2025 Investors are anticipating another strong year ahead for AppLovin shares as It continues to thrive from the growth of advertising and a ballooning gaming market. Bank of America recently named AppLovin a Top Pick in Gaming & Advertising Networks for 2025, anticipating it will benefit from continued growth driven by higher returns on ad spend and total new addressable market opportunities in areas such as pet supplies and vehicle parts. “We believe AppLovin has a unique opportunity to transform its gaming inventory into a powerful new e-commerce advertising platform,” the bank wrote. Bank of America also expects AppLovin to benefit from “constructive” feedback on its Audience+ initiative, which helps businesses connect with audiences. The bank's $375 price target suggests a 13% upside from Wednesday's close. BTIG's Lampen also sees the business opportunity presented by AppLovin as a driving force that could position the company for strong long-term growth. “That's the bull case at this point — you're just scratching the surface of a business opportunity that could be multiples of what the gaming business is now or will become over time,” Lampin said. Analysts surveyed by FactSet see adjusted 2025 earnings at $6.90 per share, up 70% from $4.07 in 2024, on revenue of $5.64 billion valued at 23% above last year's $4.59 billion.
Trending
- AppLovin crushed it in 2024. Where does the Street stand going into 2025?
- McDonald's is closing three CosMc locations — and opening two more
- JWN raises sales forecast after better holiday season
- Mark Zuckerberg says Biden pushed Meta to remove posts about vaccines
- All, WBA, DAL, WBD and more
- Find income in commercial real estate with rising prices, according to experts
- Insurance stocks are selling off sharply as potential losses associated with the Los Angeles wildfires increase
- The unemployment rate among black women fell in December
AppLovin crushed it in 2024. Where does the Street stand going into 2025?
