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AppLovin (NASDAQ:APP) shares slipped on Friday as Needham started coverage on its shares, noting that while revenue is expected to be strong the next couple of years, the mobile software company looks increasingly likely to face “greater competition” from some of the largest tech companies in the world.
Analyst Bernie McTernan started coverage on AppLovin (APP) with a hold rating, noting that the company’s “best in class” AXON machine-learning platform executed “strongly” in a favorable environment, as Apple’s (NASDAQ:AAPL) iOS privacy changes helped the company and other mobile ad-tech operators. However, it may not be too long before it turns into a competition.
“While we expect a still-commendable 25% organic revenue [compound annual growth rate] over the next two years, we do not foresee a catalyst that will boost the stock’s adjusted EBITDA multiple given that we anticipate greater competition with some of the largest companies in the world, Meta (META), Google (NASDAQ:GOOG) (NASDAQ:GOOGL) and increasingly Apple (AAPL),” McTernan wrote.
The analyst added that Apple’s (AAPL) next move may be “more painful” for AppLovin (APP) as it’s possible that the tech giant creates an ad network focused on mobile apps.
McTernan noted that AppLovin’s (APP) recent – and rejected – unsolicited bid for Unity Software (U) also brings up the efficacy of AXON and whether it can make further gains if competition increases.
Earlier this week, AppLovin (APP) announced that it had launched the first non-fungible token marketplace for developers to monetize mobile gaming.
