AppLovin: An Attractive Bet in the Mobile App Tech Space

AppLovin Corporation (NASDAQ: APP) is a well-known company in the mobile application industry. The company’s software platform makes it easy to market and monetize applications offered by mobile app developers. It also offers free mobile games.

The company is headquartered in Palo Alto, California. It was founded in July 2011 and became a member of Nasdaq, after an IPO (Initial Public Offering) of its shares, in April 2021.

AppLovin and KKR Denali Holdings LP sold 22.5 million and 2.5 million shares, respectively. The public offering price was $80 for each share. Through the IPO, the company raised $2 billion in gross proceeds (equivalent to nearly $1.75 billion in net proceeds), some of which was used to repay debt in a revolving credit facility.

On TipRanks, the stock has a strong buy consensus rating based on 12 buys. APP’s average price target of $69.58 reflects 98.91% upside potential from current levels.

A more detailed discussion of AppLovin’s price performance and growth prospects will help investors form an opinion on the stock.

Price performance and market capitalization

AppLovin’s first trading date on the stock exchange was April 15, 2021. The stock’s opening price that day was $70, down 12.5% ​​from the IPO price. trading, and the closing price was $65.20, reflecting an 18.5% decline from the IPO price. Since the IPO, AppLovin’s shares have risen 50%.

It appears hedge funds and retail investors have used the company’s low share price to boost their stock holdings. By TipRanks tools, hedge funds bought 1.1 million shares of APP in the last quarterand retail investors holding stakes in APP increased by 1.3% in the last 30 days.

Currently, the company’s market capitalization stands at $13.2 billion.

Important milestones

AppLovin has reported results for five quarters since listing on the stock exchange. Net results for the five quarters were below expectations. It is due to report its results for the second quarter of 2022 in August 2022. The consensus estimate for second-quarter earnings is $0.15 per share.

In April 2022, AppLovin entered into a partnership with The Trade Desk (NASDAQ: TTD), a pioneer in the advertising technology market. The same month, the company acquired Wurl for $430 million, furthering its penetration into the connected TV market.

In February 2022, AppLovin announced that its board of directors had approved a $750 million share buyback program. Meanwhile, the company has partnered with HUMAN Security, Inc. to prevent invalid traffic on its platforms. In January 2022, it acquired the MoPub business of Twitter, Inc. (NYSE: TWTR) for $1.05 billion.

In December 2021, the company completed a secondary offering of 7.5 million shares for $83 per share. Additionally, the company raised $1.5 billion through term loans in October 2021.

Growth drivers and projections

The company’s strong presence in North and South America, Europe and Asia, as well as growth opportunities through partnerships and acquisitions, enhance its investment appeal.

Strong software solution offerings, innovation capabilities, a large number of daily active users, and a high number of installs across the platforms are also beneficial to the business. AppLovin forecasts its Total Addressable Market (TAM) to grow 10.6% CAGR to $283 billion in 2024 from $189 billion in 2020.

For 2022, the company is forecasting earnings before interest, taxes, depreciation, and amortization (EBITDA) of $1.2 billion, up from the $1 billion previously forecast. The EBITDA margin is expected to be in the mid range of 30% versus the 20% average previously reported.

Software revenue is expected to be $1.14-1.29 billion in 2022 and $2 billion in 2023. Notably, software revenue was $674 million in 2021. Total revenue is expected to be 3 .14 ​​to $3.44 billion in 2022, compared to $2.79 billion in 2021.

Opinions and data

four days ago, KeyBanc’s Tyler Parker initiated a hedge on APP shares with a buy rating and a price target of $55 (57.23% upside potential).

According to the TipRanks tool, the total company website traffic increased 124.85% year over year for May 2022, 114.04% so far in the second quarter of 2022 and 289.98% since the beginning of 2022. Increased traffic to the company’s website bolsters its revenue prospects.

Conclusion

The growing use and demand for mobile apps around the world has expanded growth opportunities for AppLovin. This company could be attractive to investors looking for growth investment stocks. The decline in the company’s stock price could be used to gain exposure to the stock.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.