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On Friday, BTIG analyst Clark Lampen updated the firm’s outlook on AppLovin Corp (NASDAQ:APP), increasing the price target to $480 from the previous $471 while sustaining a Buy rating on the stock. The adjustment follows AppLovin’s announcement that it expects to finalize the sale of its first-party (1P) mobile games business, known as the legacy "Apps" segment, to Tripledot Studios, a private company, within the current quarter. The company, currently valued at $130 billion, has demonstrated remarkable performance with a 365% return over the past year. According to InvestingPro analysis, AppLovin maintains an impressive gross profit margin of 77.7% and carries a GREAT financial health score.
Lampen noted that BTIG’s financial model for AppLovin has been revised to exclude the contributions from the sold studios starting from the second half of 2025. Consequently, the firm’s consolidated Revenue and EBITDA forecasts have been reduced. However, the core Advertising business of AppLovin is projected to see an increase in revenue. This is due to the company’s ability to now recognize revenue from campaigns that were previously first-party. The company has already demonstrated strong revenue growth of 41.6% in the last twelve months, generating over $5.1 billion in revenue.
The analyst highlighted that for the second quarter of 2025, minimal to no contribution is expected from the sold business units. Nonetheless, BTIG is prepared to update its model if the transaction is completed sooner than anticipated. Lampen provided further details on the adjustments to revenue and expenses, the key assumptions made, and his perspective on the current debates and setup surrounding AppLovin.
AppLovin’s decision to divest its 1P mobile games business is part of a strategic move to focus on its core Advertising operations. The sale to Tripledot Studios is intended to streamline AppLovin’s business structure and enhance its financial profile. Despite the lowered revenue and EBITDA projections, BTIG continues to regard AppLovin as a Top Pick, reflecting the firm’s confidence in the company’s growth prospects following the divestiture.
In other recent news, AppLovin Corp has released its first-quarter results, prompting various analyst firms to adjust their forecasts and ratings. Cannonball Research maintained a Buy rating with a $620 price target, projecting significant revenue and earnings growth for fiscal year 2025, following the company’s divestiture of its Apps business. UBS also sustained a Buy rating, raising the price target to $475, highlighting strong growth in gaming advertisement revenue and improved EBITDA margins. Benchmark analysts reiterated a Buy rating with a $525 target, noting AppLovin’s focus on scalable advertising solutions and potential growth in e-commerce.
Piper Sandler increased their price target to $455, maintaining an Overweight rating, and cited upcoming catalysts such as the testing of a self-serve platform and international expansion. They emphasized the divestiture of the lower-margin Apps segment as a strategic move. Meanwhile, Oppenheimer adjusted their price target to $500, down from $560, but kept an Outperform rating, acknowledging AppLovin’s resilience against macroeconomic challenges and growth in non-gaming advertising. These developments reflect a generally positive outlook among analysts, with expectations of continued growth driven by strategic changes and innovations in the advertising sector.
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