AppLovin (APP) stock soared more than 2% on Monday after Needham upgraded its rating for the mobile ad tech platform to Buy from Hold with a price target of $700. Needham analyst Bernie McTernan cited the company’s e-commerce growth and the pullback in APP stock for his rating upgrade.
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Despite the 24% selloff over the past month, AppLovin stock has risen 50% in the past year, driven by optimism about the company’s artificial intelligence (AI)-powered Axon 2 engine and expansion beyond mobile gaming into e-commerce.
Needham Analyst Turns Bullish on AppLovin Stock
McTernan stated that based on “additional work on e-commerce,” he is now more optimistic about AppLovin’s e-commerce revenue growth trajectory in 2026. The 4-star analyst also finds APP stock attractive following the pullback from the highs seen a month ago. McTernan raised his estimate for AppLovin’s e-commerce revenue for 2026 to $1.45 billion from the prior forecast of $1.05 billion.
Furthermore, the analyst expects APP’s e-commerce revenue to grow to $251 million in Q1 FY26 from $191 million in Q4 2025, reflecting a notable rise compared to the previous assumption of flat growth. McTernan’s revised estimate includes sequential growth in the first quarter, as he now expects the increase in advertisers from the self-service launch and higher spending to more than offset the seasonality typically seen in the quarter.
Despite his higher e-commerce estimates, McTernan sees further upside potential, with his bull case assuming that AppLovin can “experience a similar trajectory as TikTok.”
McTernan also highlighted industry catalysts, including better ad formats, higher demand for playables and rewarded video, and AI-driven apps fueling increased mobile spending. Interestingly, the analyst noted that data shows two major brands, Kalshi and Etsy (ETSY), joining or testing the AppLovin platform, bolstering its user base, which comprises companies like Crocs (CROX), Reebok, Yeti, and Skims.
Is APP Stock a Buy, Sell, or Hold?
Currently, Wall Street has a Strong Buy consensus rating on AppLovin stock based on 18 Buys and two Hold recommendations. The average APP stock price target of $769.58 indicates 44% upside potential.
