Jefferies has increased its target price for AppLovin (APP, Financial) shares from $460 to $530 while maintaining a Buy rating. The decision follows a remarkable 71% increase in ad revenue compared to the previous year. Analysts at Jefferies are optimistic that the company's growth will accelerate further. They highlight that AppLovin currently serves just 0.1% of its total potential advertisers, with fewer than 1,000 web-based advertisers on its platform. The introduction of self-serve advertising tools is seen as a significant opportunity for expansion.
Furthermore, Jefferies notes that AppLovin's guidance for revenue growth in the second quarter, estimated at 4% to 5% quarter-over-quarter, appears conservative. This forecast likely doesn't account for the potential advantages from the rollout of self-serve tools, suggesting that the company's growth trajectory could exceed expectations.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 22 analysts, the average target price for AppLovin Corp (APP, Financial) is $477.58 with a high estimate of $650.00 and a low estimate of $200.00. The average target implies an upside of 57.38% from the current price of $303.46. More detailed estimate data can be found on the AppLovin Corp (APP) Forecast page.
Based on the consensus recommendation from 27 brokerage firms, AppLovin Corp's (APP, Financial) average brokerage recommendation is currently 1.9, indicating "Outperform" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
Based on GuruFocus estimates, the estimated GF Value for AppLovin Corp (APP, Financial) in one year is $89.93, suggesting a downside of 70.37% from the current price of $303.46. GF Value is GuruFocus' estimate of the fair value that the stock should be traded at. It is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business' performance. More detailed data can be found on the AppLovin Corp (APP) Summary page.
APP Key Business Developments
Release Date: May 07, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- AppLovin Corp (APP, Financial) reported a 40% increase in total revenue year-over-year, reaching $1.5 billion, showcasing strong business growth.
- The company achieved an impressive 83% increase in adjusted EBITA, reaching $1 billion, with a 68% adjusted EBITA margin.
- AppLovin Corp (APP) generated $826 million in free cash flow, marking a 113% increase year-over-year.
- The company announced a strategic move to sell its games business, allowing it to sharpen its focus on advertising.
- AppLovin Corp (APP) is advancing its e-commerce and web advertising solutions, with plans to launch a self-service dashboard, which is expected to unlock significant growth opportunities.
Negative Points
- The company faces scrutiny from short sellers, which could impact investor confidence.
- AppLovin Corp (APP) is still in the early stages of its web advertising model, which may take time to fully develop and optimize.
- There is a potential impact from tariffs on web-based advertising, although the company believes it is well-positioned to manage these changes.
- The company is resource-limited in onboarding new web advertisers, which has slowed down the pace of new customer additions.
- AppLovin Corp (APP) acknowledges that its current web advertising model does not work perfectly for all customers, indicating room for improvement.
