Is AppLovin a purchase after the announcement of the acquisition of MoPub?

Palo Alto, Calif. Based mobile application technology company AppLovin Corporation (APP) made a disappointing public debut on April 15, 2021 and its shares closed 18.5% to the day. However, the stock gained 28.9% going over the past month and 97.3% over the past three months to close Friday’s trading session at $ 112.36.

In addition, its shares soared to its 52-week high at $ 116.09 on November 11, 2021, thanks to impressive third-quarter earnings and investor optimism about its project. acquisition of MoPub from Twitter, Inc. (TWTR).

However, law firm Schall announced in April 2021 that it APP survey on potential violations of securities laws. In addition, the company faces intense competition from other players, such as Unity Software Inc. (U) and Playtika Holding Corp. (PLTK). Thus, the short-term outlook for the stock seems uncertain.

Here’s what could influence APP’s performance in the coming months:

Large portfolio of products and services

APP works through an integrated suite of products (AppDiscovery, MAX, SparkLabs and Adjust) to boost mobile applications. The company acquired Adjust in April 2021. In addition, developers from more than 130 countries use its software solutions. Additionally, APP partner studio Belka Games premiered Bermuda Adventures on November 4th.

Impressive financial data

For the third quarter, ended September 30, 2021, APP revenue grew 90.4% year-on-year to $ 726.95 million, mainly due to the impressive scale and accelerated growth of its platform. -software form based on ML. His organic revenue increased by 58% year-on-year. And its Monthly Active Players (MAP) stood at 2.90 million, an increase of 93.3% year-over-year.

In addition, APP’s operating profit for the quarter was $ 45.05 million, compared to a loss of $ 75.46 million in the prior year quarter. Its net profit amounted to $ 178,000, compared to a loss of $ 89.69 million during the period last year.

Stretched evaluation

In terms of forward non-GAAP P / E, APP’s 74.31x is 192.8% higher than the industry average 25.38x. Likewise, the stock’s 1.91x non-GAAP forward PEG is 10.8% higher than the industry average 1.72x. Its respective front EV / S and P / S of 15.38x and 15.10x are above industry averages of 4.31x and 4.28x.

POWR Ratings Reflect Uncertain Short-Term Outlook

APP has an overall C rating, which equates to a neutral in our POWR rating system. POWR scores are calculated by considering 118 separate factors, each factor being weighted to an optimal degree.

Our proprietary scoring system also rates each stock against eight distinct categories. APP has a C rating for value, which is consistent with its above industry valuation ratios.

The stock has a C rating for quality, which is in line with APP’s last 12-month EBIT margin of 4.08%, which is 54.9% lower than the industry average of 9. , 04%. Additionally, it has a D rating for stability, which is consistent with its beta of 1.10.

APP is ranked # 85 out of 162 stocks in the Software – Applications industry. Also click here to view additional POWR ratings for APP (Sentiment, Momentum and Growth).

Click here to view our Software Industry Report for 2021

Final result

Impressive third quarter earnings have helped APP shares soar over the past few days, and they are currently trading 3.2% below their 52 week high. However, Wall Street analysts expect the stock to hit $ 108.80 in the near term, indicating a potential decrease of 3.2%. Additionally, the company’s near-term prospects appear uncertain until its acquisition of MoPub goes through. Thus, we believe that it might be wise to wait before recovering its shares.

How does AppLovin (APP) compare to its peers?

Although APP has an overall POWR rating of C, one might consider investing in stocks of software – applications with an A (strong buy) rating, such as Commvault Systems, Inc. (CVLT), Open Text Corporation (OTEX ) and Oracle Corporation (ORCL).

APP shares rose $ 3.55 (+ 3.16%) in pre-market trading on Monday. Since the start of the year, APP has gained 72.33%, compared to 26.20% for the benchmark S&P 500 during the same period.

About the Author: Manisha Chatterjee

Since she was young, Manisha has had a strong interest in the stock market. She specialized in economics at university and has a passion for writing, which led to his career as a research analyst. Following…

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