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Investing.com - Oppenheimer maintained its Outperform rating and $740.00 price target on AppLovin Corp (NASDAQ:APP), currently trading at $552.64, following discussions with performance marketing experts about the company’s e-commerce capabilities. The company, with a market capitalization of $187 billion and impressive revenue growth of 79% over the last twelve months, appears overvalued according to InvestingPro Fair Value metrics.
The investment firm hosted calls on October 21 with two experienced performance marketers to assess AppLovin’s position in the digital advertising landscape. One participant was an e-commerce agency CIO managing $75-100 million in annual spending, while the other was a brand marketer with over $20 million in yearly advertising expenditure. The company’s strong market position is reflected in its impressive 78.6% gross profit margins and perfect Piotroski Score of 9, according to InvestingPro data.
Both marketing professionals reported that AppLovin is establishing itself as a "durable, scalable channel" for direct-to-consumer brands. The platform currently captures between 5-20% of advertising wallet share at the agency level, with some clients allocating funds comparable to their Meta spending.
For the brand marketer interviewed, AppLovin already accounts for approximately 30% of their advertising budget, with projections to reach 40% or higher in the fourth quarter—exceeding their spending on Meta. The onboarding process for new customers was described as rapid, typically taking days to weeks.
Performance metrics on the AppLovin platform generally match or outperform Meta with variance of about 20% depending on the brand, while CPMs (cost per thousand impressions) have remained flat or declined since the October 1 self-serve launch, according to the marketing experts consulted. With the company’s next earnings report due on November 5, investors can access comprehensive analysis and 18 additional key insights through InvestingPro’s detailed research reports.
In other recent news, AppLovin Corp has been the focus of several significant developments. The company is facing preliminary investigations from state attorneys general in Delaware, Oregon, and Connecticut concerning its data collection practices. Additionally, the Securities and Exchange Commission is reportedly examining allegations that AppLovin may have violated service agreements to enhance targeted consumer advertising. Despite these regulatory challenges, AppLovin has received an upgrade from S&P Global Ratings to ’BBB’ from ’BBB-’, reflecting improved business prospects and competitive positioning. The company is projected to experience substantial revenue growth, with expectations of a 65% increase in 2025 and an additional 25% in 2026. Analyst firms have shown confidence in AppLovin’s potential, with RBC Capital initiating coverage with an Outperform rating and Oppenheimer reiterating its Outperform rating. Furthermore, BofA Securities has raised its price target for the company to $860, maintaining a Buy rating, after analyzing the effectiveness of AppLovin’s advertising among eCommerce merchants. These developments highlight the mixed landscape of regulatory scrutiny and positive analyst sentiment surrounding AppLovin.
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