AppLovin Corp (NASDAQ:APP) stock rose 7% on Monday following public remarks from Jefferies analyst James Heaney defending the company amid its steep year-to-date losses. Heaney reaffirmed a Buy rating and set a price target of $860, calling the stock’s roughly 39% decline this year a "great buying opportunity" for what he characterizes as a high-growth business.
In his note, Heaney outlined expectations for AppLovin to achieve more than 50% top-line growth by fiscal year 2026. He also pointed to a valuation metric he finds attractive: the shares were trading at about 15 times his fiscal 2027 EBITDA estimates.
AppLovin’s shares had closed last Friday at $406.70, a level down about 40% year-to-date, as investors have weighed possible effects from artificial intelligence on the company’s business model. Despite those investor concerns, Heaney described recent worries tied to CloudX, Meta Audience Network, and Google Genie as "overblown risks" and said those fears have contributed to a dislocation in the stock price.
Looking to near-term operational results, Heaney said he expects AppLovin to post "a significant revenue beat" in the fourth quarter. That view is grounded in positive survey responses and expert checks across AppLovin’s gaming and e-commerce operations, according to his research note.
Context and market reaction
Monday’s jump in AppLovin shares reflects the market responding to Jefferies’ public defense and reiteration of an upbeat outlook. The analyst’s combination of a high price target and projected double-digit revenue growth through 2026 appears to have tempered some investor apprehension, at least in the short term.
Key takeaways
- Jefferies reiterated a Buy rating and an $860 price target for AppLovin.
- The analyst sees the stock’s roughly 39% YTD drop as a compelling buying opportunity and forecasts over 50% revenue growth by FY2026.
- Heaney believes concerns about CloudX, Meta Audience Network, and Google Genie are exaggerated and that the company is attractively valued at about 15 times his FY2027 EBITDA estimate.
Risks and uncertainties
- Ongoing investor concern that AI developments could negatively affect AppLovin’s business model - a risk to the mobile advertising and tech sectors.
- Potential market reaction to CloudX, Meta Audience Network, and Google Genie developments, which Jefferies calls "overblown" but which remain sources of uncertainty for advertisers and platform-dependent businesses.
- Execution risk around achieving the anticipated revenue growth and meeting the stated expectation of a fourth-quarter revenue beat, which would affect visibility in both gaming and e-commerce segments.