Valens Equity Weekly Insights - 2024 06 04
AppLovin (APP) has improved its profitability as it's shifted its business from a mobile game operator to an advertisement software platform. Uniform Accounting highlights the company's profitability improvements that the market is missing, indicating equity upside.AppLovin has leveraged its experience and data from operating a portfolio of 200 mobile games to build out its mobile advertising software business. Its industry-leading platforms are used by the largest players in the mobile advertising space, and thanks to its AXON 2.0 AI model, AppLovin is positioned to expand outside of mobile gaming and into the larger mobile advertising market. As it continues to build its more profitable software business and ride strong growth in its end market, the company should be able to maintain current margins, yet the market is pricing its growth and margins to fall to levels it hasn't seen since apps were its main business.
AppLovin's management team owns a significant portion of the company's outstanding shares, aligning them with shareholders
Management confidence in the Q1 earnings call about the competitive moats from its AI models and its ocean of app ad data supports further earnings expansion and continued growth.
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