Should one invest in Applovin shares currently?
Applovin: Own a Piece of the Mobile Advertising Pie
(APP -9.08%) has captivated shareholders with an astounding 379% return over the past year. This adtech giant, known for its suite of AI-powered mobile marketing solutions, has been a hot investment, riding the wave of strong demand in the mobile gaming and advertising industries. Yet, despite impressive financial trends, the stock has seen volatility, dropping about 23% in the past month. Is this dip a sign to sell, or is it an opportunity to double down? Here's what you need to know.
The Magic of AXON AI
If you've ever played a mobile game and seen an ad pop-up, there's a good chance Applovin is behind it. Their innovative in-game ad formats have revolutionized the "free-to-play" game industry. From rewarded videos to playable demos designed to drive downloads, Applovin helps developers monetize their apps by offering a seamless user experience.
Applovin's MAX marketplace is a real-time bidding platform where advertisers compete for ad placements in apps. The success of their latest AXON 2.0 AI engine lies in its ability to match ads with the optimal audience using machine learning and advanced algorithms, boosting engagement and conversions.
From the Q4 earnings report, full-year revenue skyrocketed 43% from the previous year to reach $4.7 billion. Remarkably, even with this massive top-line growth, total expenses rose only 8%, thanks to Applovin's lean operational structure achieved through AI and automation in its internal workflows. This efficiency translated into a phenomenal 343% net income growth from 2023—a key factor in the stock's performance.
Analysts project that Applovin will grow revenue by a solid 21% this year, alongside an estimated 69% increase in earnings per share (EPS) to $7.65.
Applovin's 2025 Growth Strategy
A significant development in 2025 was Applovin's announcement of selling its in-house mobile gaming portfolio and publishing unit for $900 million. This move allows the company to focus on its core advertising platform.
The strategy involves expanding into new ad verticals outside of gaming, including connected TV (CTV) ads. Leveraging AXON 2.0, Applovin aims to support streaming video platforms, targeting high-profile competitors like The Trade Desk and Magnite. Separately, Applovin is pursuing an e-commerce initiative, building on its 2024 pilot by integrating AXON to deliver targeted product ads within its mobile app network, aiming to capture a piece of the online shopping ad market.
The company's outlook justifies its high valuation, with shares trading at 36 times analysts' consensus 2025 EPS forecast. Though this level represents a premium compared to industry peers like The Trade Desk, the advantage of Applovin's stock is its stronger earnings growth in the mobile ad space. With the potential to take market share from peers with leadership in AI tools, the stock could continue its climb.
Dive In: A Buy-the-Dip Opportunity?
With bold strategic moves and hypergrowth results, I'm bullish on Applovin stock and believe the company is just getting started in its evolution into a more durable and versatile advertising powerhouse. I predict shares will rebound with more upside into 2025 and beyond. That said, Applovin's high bar of expectations in the market carries a layer of risk to consider. If economic conditions slow, it could pressure mobile advertising rates, leading the company to underperform financial estimates and drag the stock lower. For tech-savvy investors unfazed by market swings, Applovin is a great option for long-term growth and AI exposure to complement a diversified portfolio.
Still on the fence? Many analysts remain confident in Applovin's potential, with BofA reaffirming its 'Buy' rating and Benchmark highlighting the company's AI and self-service tools. Institutional upgrades also reflect continued market confidence. As of March 17, 2025, the stock price increased, driven by these factors and positive sentiments. Despite challenges from competitors like Unity, Applovin's future growth hinges on maintaining its competitive edge, scaling operations, and adapting to market changes while exploiting emerging opportunities in AI and digital media.
- The volatility in Applovin's stock price, despite impressive financial trends, could be a sign that it's a great opportunity to invest more, as some analysts predict further growth into 2025 and beyond.
- Applovin, a major player in the mobile advertising industry, has revolutionized the in-game advertising experience through AI-powered ad formats, generating revenue estimated to grow by 21% this year.
- To focus on its core advertising platform, Applovin sold its in-house mobile gaming portfolio for $900 million in 2025, aiming to expand into new ad verticals like connected TV (CTV) and e-commerce, using AXON 2.0 AI engine to target high-profile competitors and capture a piece of the online shopping ad market.
- While Applovin's high valuation reflects the potential to capture market share from AI-tools leaders, it carries a layer of risk, as economic conditions could pressure mobile advertising rates if they slow down, potentially leading the company to underperform financial estimates and drag the stock lower.
