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The more bullish view was based on greater confidence in market share gains in its mobile ad tech segment. Analysts also see higher near to medium-term growth outlook for software, and they think the mobile game segment has bottomed.
“A stabilizing mobile games market drove the 1Q beat, and the rollout of AXON 2.0 was behind the stellar 2Q performance and 3Q guide. 2 years ago we would have called AXON 2.0 machine learning algorithm, today we get to call it AI,” wrote the analysts.
They added, “Last month we ran a proprietary survey of 28 mobile game developers who buy and sell ads. The findings reinforced our view that mobile gaming has found a bottom and is stabilizing, and also showed positive signs for AppLovin and AXON 2.0 on the demand side.”
AppLovin’s stock could climb 95% in an upside scenario, or in a downside scenario, it could fall 48%. Jefferies said its “base case” was for shares to climb 30% and hit its price target of $50.
