AppLovin slips as Needham begins coverage, but sees further competition from Apple, Google

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AppLovin (NASDAQ:APP) shares fell on Friday as Needham began hedging its shares, noting that while earnings are expected to be strong over the next two years, the mobile software company looks increasingly likely to face “increased competition” from some of the world’s biggest tech companies.

Analyst Bernie McTernan started AppLovin’s (APP) coverage with a holding note, noting that the “best-in-class” AXON machine learning platform was performing “strongly” in a favorable environment, like Apple (NASDAQ: AAPL) iOS privacy changes have helped the company and other mobile ad tech operators. However, it may not be long before this turns into a competition.

“While we expect a still commendable organic revenue of 25% [compound annual growth rate] over the next two years, we do not expect a catalyst that will increase the adjusted EBITDA multiple for the stock as we expect more competition with some of the largest companies in the world, Meta (META), Google (NASDAQ:GOOG) (NASDAQ: GOOGL) and increasingly Apple (AAPL),” McTernan wrote.

The analyst added that Apple’s (AAPL) next move could be “more painful” for AppLovin (APP), as the tech giant may create an ad network focused on mobile apps.

McTernan noted that AppLovin’s (APP) recent – and rejected – unsolicited bid for Unity Software (U) also speaks to AXON’s efficiency and whether it can make additional gains if competition increases.

Earlier this week, AppLovin (APP) announced that it has launched the first non-fungible token marketplace allowing developers to monetize mobile games.

Martin E. Berry