"Morgan Stanley analysts led by Matthew Cost and Brian Nowak, CFA reiterated their overweight rating and $720 price target on AppLovin on May 7 via a note. The stock closed at $468.83 on May 6, giving the company a market cap of approximately $158.8 billion and implying roughly 54% upside to the bank's target, according to Yahoo Finance. The note describes the Q1 results as strengthening the bank's long-term thesis. Revenue and EBITDA came in 4% and 6% ahead of Morgan Stanley's prior estimates."
"The standout development in the quarter was the pace of AppLovin's web and ecommerce advertising business. Morgan Stanley estimated the segment contributed approximately $350 million in revenue during Q1. Management also disclosed that April set a record month for web revenue, suggesting the exit rate from the quarter was strong and that momentum has continued. The bank attributed the outperformance to meaningful model improvements that delivered immediate gains in return on ad spend, prompting advertisers to raise budgets."
"AppLovin just delivered another strong quarter. Its e-commerce advertising business is accelerating faster than expected. And Morgan Stanley walked away from the results more convinced than before. The bank's message to investors is direct: AppLovin is still in the early days of what could be a multi-year growth cycle, and the best part of the story is yet to come."
AppLovin delivered a strong quarter with e-commerce advertising accelerating faster than expected. Morgan Stanley reiterated an overweight rating and a $720 price target, noting that Q1 revenue and EBITDA came in ahead of prior estimates. Ad revenue grew 11% quarter over quarter, exceeding AppLovin’s own 6% growth target. The web and ecommerce advertising segment contributed about $350 million in Q1 revenue, and April set a record month for web revenue, suggesting strong exit momentum. Morgan Stanley attributed the outperformance to model improvements that improved return on ad spend, leading advertisers to raise budgets. The bank viewed AppLovin as still early in a potential multi-year growth cycle.
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