Analysts reboot AppLovin stock price target after earnings

Here's what could happen next to AppLovin shares.

Feb 13, 2025 - 23:58

Analysts reboot AppLovin stock price target after earnings

Back in 1959, you could ride the range without ever getting off your sofa.

There were more than 30 different Westerns on TV that year, and one of the most popular was Rawhide, the story of drovers on cattle drives starring Eric Fleming as trail boss Gil Favor and Clint Eastwood as his right-hand man Rowdy Yates.

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The show featured a rousing theme song performed by Frankie Laine that included the sound of a cracking whip and the loudly hollered commands to move 'em on and head 'em up,

When it was released, the tune hit number 6 on the charts. The Western Writers of America consider it one of the top Western songs of all time.

This may sound like trivia night at your local saloon, but it works perfectly well for Stephen Guilfoyle. The veteran trader reviewed AppLovin's (APP) fourth-quarter results in his TheStreet Pro column.

Shares of the Palo Alto, Calif-based mobile tech company were jumping like a bucking bronco on a hotplate after AppLovin whupped Wall Street's expectations.

"What was that? A shooting star? Was it a comet?" Guilfoyle rhetorically asked. "Nope and nope. Those were the shares of AppLovin Corporation screaming higher overnight after the firm reported its Q4 financial results following Wednesday's closing bell."

Applovin Chief Executive Adam Foroughi said the company's fourth quarter was a major milestone
Applovin-TheStreet

Trader says AppLovin had a heck of a quarter

It was as if Gil Favor and Rowdy Yates were driving the herd across the dusty plains in a hurry, he observed, quoting the lyrics: "Keep rollin', rollin', rollin', though the streams are swollen, keep them doggies rollin', Rawhide."

The Wall Street veteran, whose career dates back to the floor of the New York Stock Exchange in the 1980s, said it was difficult to describe how successful the quarter was for the app discovery services provider and AI-powered matchmaker, which puts advertiser demand together with publisher supply, but he assured his readers that "these guys are rockin'."

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"This was a heck of a quarter," Guilfoyle said. "The advertising business is exploding. Guidance is strong. Cash flows are quite robust. There's a lot to like. The current situation is strong. The long-term debt load is the only potential blemish I can find when thinking about this firm, and that is not today's problem."

Adam Foroughi, co-founder, chairman, and CEO, told analysts during the company's earnings call that the fourth quarter was "a major milestone."

"For the first time, we captured meaningful holiday shopping advertising dollars and witnessed the impact of an advertising category beyond solely gaming contributing to our growth," he said.

AppLovin earned $1.73 per share, up from 51 cents from a year ago, and topped analysts’ expectations of $1.24 per share. Revenue totaled $1.37 billion, up 43% from a year earlier, and beating Wall Street’s call for $1.26 billion in sales.

"We operate a platform that reaches over a billion people in mobile games daily with their engagement times comparable to social networks," Foroughi said. "Historically, most of our ads focused on advertising for other games. But now, we're attracting a broader set of advertisers."

The company, which was the top-performing stock on the Nasdaq last year, expects first-quarter revenue of between $1.36 billion and $1.39 billion, exceeding the $1.32 billion average analyst estimate,

AppLovin's shares have soared a mind-boggling 929% from a year ago, and the stock closed up 24% on Feb. 13 to $471.67.

Analyst: AppLovin gains huge share of ad spend

"Where we once focused on gaming, we're now positioning ourselves to serve the entire global advertising economy," Foroughi told analysts. "Importantly, the users engaging with our network aren't just shifting existing purchases."

They're discovering new products while playing the games they love, generating truly incremental demand," he added.

By enabling these discoveries, he added, "we're expanding the global economy for consumers and advertisers alike."

Investment firms are lovin' AppLovin's results. They raised their price targets for the company's shares.

BTIG analyst Clark Lampen raised the firm's price target on AppLovin to $600 from $437 and kept a buy rating on the shares, according to The Fly.

The company's results meaningfully exceeded the firm's above-consensus expectations and met the higher end of buy-side bull expectations heading into the print, Lampen said, while its commerce extension ramped faster than anticipated and take rates were higher than expected.

Wedbush analysts boosted their price target to $620 from $545 while keeping their outperform rating.

"AppLovin is slowly gaining a huge share of the $15 billion ad spending inside mobile games, driving its recent outsized results," the firm said.

"Much like mobile games, AppLovin’s ad technology can help e-commerce partners identify likely purchasers of their products, and we suspect that mobile advertising of products and services will grow from the current $1 billion – $2 billion annual level to over $10 billion in the next three years."

Wedbush said that the Western mobile game market generates well over $100 billion in annual revenue, with around 30% of revenue spent by the developers on user acquisition.

This $30 billion in annual spending is growing by around 7% per year, the firm said, shifting primarily from socials before 2020 to roughly 50% in mobile games today, the firm said.

Bank of America Securities analyst Omar Dessouky raised the firm's price target on AppLovin to $580 from $375 and kept a buy rating on the shares.

"APP is a market leader among mobile ad networks operating in the mobile gaming app install market, where its Axon machine learning engine helps app advertisers identify high paying users and offers superior Return on Ad Spend," the analyst said.

Dessouky said that he views AppLovin as "well-positioned to grow and retain share in the App Install Ad market over the long term with the staged rollout of its new generation ML engine Axon 2.0 driving continued growth in 2024."