AppLovin Price Target Upgrade

Investment Overview
Jefferies analysts have raised their price target for AppLovin (NASDAQ: APP) from $108 to $175 based on optimistic trends in mobile gaming ad spending revealed in their latest survey.

The survey encompasses over $1.2 billion in app install spending, indicating that key players like AppLovin, Google (NASDAQ: GOOGL, GOOG), and Meta (NASDAQ: META) are positioned to gain market share in 2025, while Unity (U) is likely to lose ground.

Market Insights
According to Jefferies, the initial projection for 2025 app install spending shows a significant increase with 6.7% growth anticipated. While 2024 is expected to see a modest 2.7% growth, 2025 will benefit from increased investments in new game launches and successful existing titles.

Jefferies noted, "We see this initial view into 2025 as optimistic for the ad networks." They also highlighted that ad spending in the fourth quarter of 2024 is expected to grow by 3.2% year-over-year.

Performance Expectations
Jefferies reported that AppLovin was the largest share gainer in 2024, with expectations to sustain this growth into 2025. Their analysis emphasized APP's user quality and ability to scale spend as significant advantages.

In light of rising costs per install (CPI) on platforms like YouTube and Meta, primarily due to holiday and political expenditures, Jefferies anticipates a shift toward mobile-game-specific networks. Despite challenges with effective cost per thousand impressions (eCPMs), overall mobile game ad revenue is expected to grow in 2025.

Long-term Forecast
Jefferies forecasts that AppLovin will maintain 20-30% Software Platform revenue growth for at least the next two years. The bullish outlook presents a price target of $246 for AppLovin, bolstered by increased e-commerce ad budgets.