Shares in mobile advertising tech company AppLovin experienced a phenomenal surge in 2024, and it seems Wall Street believes there is more room for growth in the coming year. The company, based in Palo Alto, saw its stock skyrocket by 713% last year, marking its best performance since going public in 2021. This impressive growth is largely due to the boom in online advertising and advancements in artificial intelligence. Even with its market value closing at $117 billion on Thursday, many analysts remain optimistic about AppLovin’s future prospects. According to FactSet, more than 75% of analysts rate the stock as a buy or overweight, with the average 12-month price target suggesting a 10% increase from current prices.
“This might just be the tip of the iceberg,” commented BTIG analyst Clark Lampen.
Founded in 2012, AppLovin went public via a special purpose acquisition company (SPAC) in 2021. The company primarily supports mobile game developers by helping them attract new users and enhance their revenue. “What really sets AppLovin apart is their ad algorithm,” Lampen pointed out.
The company’s success last year was largely a result of revamping this key algorithm, known as AXON, in 2023. The overhaul improved conversion rates, attracted new customers, and led to increased advertising spending from clients. According to Wedbush’s Michael Pachter, these changes were implemented around the same time Apple introduced its identifier for advertisers (IDFA) privacy updates, which changed how businesses access user data. With the revamped system, AppLovin is reportedly generating double the business from each advertisement than before. This success, together with its dominant presence in the gaming sector and a new eCommerce pilot program, helped elevate the stock’s value in 2024, stated BTIG’s Lampen.
Looking ahead to 2025, investors predict another robust year for AppLovin as it continues to gain from the expanding advertising market and a growing gaming industry. Bank of America recently highlighted AppLovin as a top choice in the gaming and ad network sectors for 2025. The bank expects the company to reap benefits from continued growth fueled by high advertising returns and new market opportunities in areas such as pet supplies and vehicle parts. “We believe AppLovin can revolutionize its gaming assets into a formidable eCommerce advertising platform,” the bank asserted.
Additionally, AppLovin is expected to take advantage of positive responses to its Audience + initiative, which aids businesses in connecting with their target audiences. Bank of America has set a price target of $375, implying a 13% gain from the close on Wednesday. BTIG’s Lampen sees AppLovin’s entry into commerce as a significant advantage that could drive substantial long-term growth. “The bullish case right now is barely touching the surface of a commerce opportunity that could be multiples larger than the current or future gaming business,” Lampen explained. Analysts polled by FactSet predict adjusted earnings of $6.90 per share for 2025, marking a 70% increase from $4.07 in 2024, on revenues of $5.64 billion, which represents a 23% rise from last year’s $4.59 billion.
