AppLovin Corp: Record Q2 & Blockbuster Acquisition Make Tech Stock More Interesting

Wall Street Increasingly Bullish on AppLovin Stock

Investors have to be lovin’ what’s been happening with AppLovin Corp (NASDAQ:APP) these days.

APP stock only went public back in April and, up until recently, it was on an unwanted roller-coaster ride (or perhaps a great trip for those who shorted the stock).

That zig-zagging momentum is now in the past. AppLovin stock is currently trading in record territory, juiced higher by record second-quarter results. Moreover, the company recently announced plans to acquire MoPub from Twitter Inc (NYSE:TWTR).

Perhaps not surprisingly, a few days after making that announcement, AppLovin Corp announced plans to raise a new $1.5-billion term loan that it intends to use for, in part, acquisitions.

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Whereas many tech stock investors have been licking their wounds from the September slide, APP stockholders have been enjoying share-price gains.

As of this writing, AppLovin stock is up by:

  • 31% over the last month
  • 59% over the last three months
  • 63% over the last six months

If Wall Street analysts are to be trusted, more gains are on the way from APP stock.

Of the analysts providing a 12-month share-price forecast for AppLovin Corp, their average target is $92.75, with a high estimate of $112.00. That points to a potential loss of 3.1% and gain of 17%, respectively.

If there’s any certainty, it’s that AppLovin stock will probably experience some well-deserved, short-term profit-taking. That shouldn’t surprise anyone after its recent gains.

Chart courtesy of StockCharts.com

About APP Stock

AppLovin helps apps get discovered by a targeted, engaged audience. It also helps brands publish, monetize, and expand the global reach of their apps. (Source: “Lender Presentation: October 2021,” AppLovin Corp, last accessed October 25, 2021.)

It’s not as easy for consumers to find the right apps as you might think. For example, on Apple Inc‘s (NASDAQ:AAPL) “App Store,” there are almost two million apps available for download. At one second per app, it would take someone more than 22 days to look at all of them. AppLovin Corp helps cut that time down.

The company’s first-party content brings more than 200 apps to millions of users around the world. Eleven of those apps were among the top 200 U.S. grossing games during the second quarter of 2021.

More than 9,000 developers from some of the top studios use AppLovin Corp’s software to grow their mobile app ecosystem.

Acquisition of MoPub

On October 6, AppLovin announced that it plans to acquire Twitter Inc’s MoPub business for $1.0 billion. (Source: “AppLovin to Acquire Twitter’s MoPub Business,” AppLovin Corp, October 6, 2021.)

MoPub’s software, which is used by 45,000 mobile apps to manage their monetization, reaches 1.5 billion addressable users around the world.

AppLovin plans to integrate MoPub’s reach and product features into its existing platform to “better maximize revenue growth and improve efficiencies for both MoPub and AppLovin customers.” (Source: Ibid.)

Record Q2 Results

For the second quarter of 2021 ended June 30, AppLovin announced that its revenue increased by 123% year-over-year to $669.0 million. (Source: “AppLovin Announces Record Second Quarter 2021 Financial Results,” AppLovin Corp, August 11, 2021.)

The company’s business software platform revenue advanced 256% year-over-year to $146.0 million. Its app revenue climbed by 102% to $523.0 million.

AppLovin Corp swung to second-quarter profitability with net income of $14.3 million, or $0.04 per share, versus a second-quarter 2020 net loss of $21.7 million, or $0.10 per share.

The company’s adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) more than tripled to $184.0 million, with an adjusted EBITDA margin of 27.5%.

Analyst Take

AppLovin stock is a great tech stock with tremendous momentum. The company runs a high-growth platform in a large and growing total addressable market (more than $180.0 billion).

AppLovin Corp recently reported excellent second-quarter results. The company advanced its software business at a record rate, leading to its best financial performance ever.

This positions the company (and APP stock) for continued growth.