Citi Raises Price Target for AppLovin Corp

Citi has significantly increased its price target for Applovin Corp (NASDAQ:APP) due to promising growth in the eCommerce sector.

The investment bank raised its target to $460 from $335, marking a 37% increase, while reiterating a "Buy" rating for the marketing software firm.

Citi’s bullish outlook was shaped after meeting AppLovin's leadership, where the company showcased advances in ad technology and initial success in its beta eCommerce advertising. Management expressed optimism about increasing ad conversion rates from 1% to 5%, aligned with benchmarks of social media platforms.

_"We came away from the meeting incrementally more bullish on the firm’s growth prospects both in mobile gaming and eCommerce,"_ the analysts commented.

Moreover, AppLovin’s ability to monetize eCommerce ads without competitive risks could draw in new advertisers beyond its traditional mobile gaming clients, according to Citi analysts.

"Given this backdrop of potential growth vectors, we are modestly raising our software revenue estimates and now fall toward the high end of the company’s targeted range of 20% to 30% annual ad revenue growth," the analysts noted.

Despite labeling the stock as high risk due to industry volatility and execution challenges, Citi highlighted AppLovin’s strong financial profile, diverse game portfolio, and leading tech stack as reducing factors of concern.

As AppLovin transitions from a mobile gaming-centric platform to a more expansive digital advertising entity, its ventures into eCommerce could prove transformative, offering substantial growth potential in the future, according to Citi.