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Morgan Stanley has increased its price target for Applovin to $750, reaffirming its overweight rating.
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The bank noted the soft launch of the Axon ADS Manager set for October 1.
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This follows a series of optimistic predictions from analysts regarding Axon’s potential beyond gaming.
Applovin stocks experienced a rise on Monday, buoyed by Morgan Stanley’s updated price target and positive forecasts concerning the upcoming debut of the Axon Ads Manager for non-gaming advertisers. This is particularly interesting as the company considers the October 1 launch a significant opportunity to tap into new advertising budgets—suggesting a bullish outlook for Applovin’s platform.
In a recent note, Morgan Stanley pointed to the Axon Ads Manager rollout as essential for demonstrating how Applovin can scale its business beyond games. This comes in the wake of favorable rating upgrades from other analysts, including Piper Sandler and UBS, who have set targets of $740 and $810 respectively. Collectively, these analysts express confidence that Applovin can attract demand outside its core gaming sector.
The enthusiasm around this is palpable, with high expectations riding on the stock’s current valuation. It’s trading at a notable rate, reflecting the anticipation of Axon’s rapid non-gaming expansion.
To give a bit of perspective, the company’s positive price-to-earnings ratio sits around 50, with a price-to-sales ratio near 42. These numbers suggest that the new self-service features might help maintain spending and bolster brand recognition outside of traditional gaming.
That said, there’s a looming concern: any significant slowdown in advertising spending might place pressure on stocks that are already highly valued. For long-term investors, the momentum is certainly appealing, but it’s worth noting that the recent uptick in stock prices seems to have factored in many potential benefits—if not all of them.
So, before jumping into an investment in Applovin, it’s wise to consider these dynamics.
The Motley Fool’s analyst team has put together a list of what they deem the best stocks to buy right now—and interestingly, Applovin doesn’t make the cut. The stocks they highlight could potentially yield impressive returns over the next few years.
Looking back, for instance, if you had invested $1,000 in Netflix when they recommended it in December 2004, your investment would have ballooned to around $652,872 today. Similarly, investing in Nvidia back in April 2005 would have turned that initial $1,000 into about $1,092,280.
