APP - AppLovin: Growth Prospects Still Underappreciated

2024-06-12 12:30:24 ET

Summary

• AppLovin's stock has come under pressure due to potential changes to the adtech landscape and expectations of growth deceleration.
• AppLovin's core business is performing well, with AXON improvements driving growth and expansion into new verticals providing growth opportunities.
• Revenue mix and operating leverage should see AppLovin's margins continue to move higher in the coming quarters.
• AppLovin's valuation is low considering the company's growth and ability to convert revenue into free cash flow.

Despite reporting strong Q1 results, AppLovin's ( APP ) stock has come under pressure in recent weeks. This appears to be driven by ongoing changes to the adtech landscape, which could threaten AppLovin's competitive positioning. There also appears to be an expectation of a rapid growth deceleration as the boost provided by AXON begins to wane....

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