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AppLovin: Capitalizing On The Surging Growth Of Mobile Game Apps

Apr. 08, 2021 4:19 AM ETAppLovin Corporation (APP)16 Comments
Douglas Kim profile picture
Douglas Kim


  • AppLovin announced its IPO price range of $75 to $85 per share. The company is selling 25 million shares.
  • At the high end of the IPO price range, the company is aiming to raise $2.1 billion, and it would be valued at $30.4 billion.
  • Our base case valuation of AppLovin is an EV of $35.1 billion, implied market cap of $35.7 billion, and target price per share of $99.8.
  • The company has been a key beneficiary of the surging growth of popular game apps.
  • Despite strong sales growth, its operating margins worsened in 2020 due to higher operating expenses.

Investment Thesis

AppLovin (NASDAQ:APP) is one of the key beneficiaries of the exploding demand for mobile apps, especially for mobile games. The company's sales growth has been surging in recent years as the company has benefited from both organic growth and

This article was written by

Douglas Kim profile picture
I have more than 25 years of experience in analyzing hundreds of companies, especially in Asia. Deep expertise in the following sectors: - Technology (E-commerce, SaaS, Internet) - Consumer - Special Situations/Deep Value Plays - Holdcos/Stubs - Asian Unicorns/Private CompaniesI have worked as an equity research/hedge fund analyst at several companies including BNP Paribas, Credit Suisse, and ING Barings, Currently, I am an independent insight provider at Smartkarma.

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (16)

Douglas, thank you for the analysis. Do you have any idea why APP has done so poorly? As you and Donovan Jones pointed out it seemed to have a good business model. However,the reception to this IPO by investors has very negative.
Askar Top profile picture
@Intmgrjapan nice review ...shaddy biz model
This company is only for sale. SEC should investigate into this IPO. There is no support at all from the banks that brought the deal. Somebody knew something that was not disclosed in the prospectus. Fraud.
Askar Top profile picture
The five major game genres offering by the company include casual, hypercasual, match-three, midcore, and card/casino. No single game of the company contributed more than 16% of its total revenue in 2020.

——— ————
Can anyone Name $app top 5 games?
@Askar Top wordscapes and other casual games like Save the girl, Happy glass
MariusMi profile picture
Anyone snatched it? or waiting for better entry price? expectations were different
FTTH investment guru profile picture
Terrible opening. Surprised considering the market today. IPO fatigue
MariusMi profile picture
I worked in ad tech, focused on games. Similar profile company to Applovin. Well Applovin is simply badass company. I will definitely invest from the get go. Strong video ads performance, great mediation platform MAX, recently acquired Adjust- attribution platform, and on top of that they have numerous gaming studios under their wing- lion studios, machington mansion guys, anda also machine zone. All rounder and biggest competitor to FB and Admob (google).
@MariusMi Any thoughts on how they'll be impacted by Apple ad tracking requirements?
MariusMi profile picture
@GillBates well, like everyone else in the industry. They will find a way to adapt. It's an industry wide challenge, wouldn't single out Applovin. Besides AppL are in a better position than other competitors such as Iron source, twitter (Mopub), due to their games portfolio. MZ,lion studios and other games as they own their data
@MariusMi Yeah I'm worried the change could affect their valuation going forward as this current valuation is pre opt in for tracking. Assuming iOS 14.5 comes out this month, we won't know how it affects these companies until 2Q numbers come out.
Owen213 profile picture
This is likely to be over $100 within the first few minutes, so I guess the question is - what do you do if you already own $u or $rblx?
MariusMi profile picture
@Owen213 went other direction.
Owen213 profile picture
@MariusMi and I bought it
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