Underappreciated Upside in AppLovin: Axon Pixel Expansion, Conservative Q4 Guidance, and Valuation Support a Buy Rating

In a report released today, Omar Dessouky from Bank of America Securities maintained a Buy rating on AppLovin, with a price target of $860.00.

Omar Dessouky has given his Buy rating due to a combination of factors tied to AppLovin’s growth trajectory and valuation. He highlights that the Axon advertising platform continues to penetrate the eCommerce market, with its tracking pixel now implemented across nearly 4,000 online merchants and showing strong month‑over‑month expansion, particularly among Shopify and Shopify Plus sellers. The recent influx of smaller merchants aligns with his expectations for a steady pace of new advertiser additions through 2026, suggesting that the current onboarding run‑rate is not a red flag but rather consistent with his long‑term model. He also notes that fourth‑quarter guidance may prove conservative because advertiser ramp‑up in November and December, along with return‑driven budget reallocation, could lead to higher actual spending than initially planned.

Dessouky further believes the market is underappreciating near‑term and medium‑term upside, keeping the stock trading in a relatively tight range until management provides an update on holiday eCommerce ad performance. He argues that pixel footprint data, which captures a broad and rapidly growing base of advertisers, is a more reliable indicator of underlying momentum than isolated agency or advertiser anecdotes. At the current multiple of roughly 28x EV/CY26E EBITDA—below other large‑cap “Rule of 40” software peers—he sees an attractive entry point, with potential upside from both a stronger‑than‑expected Q4 and future estimate revisions as self‑service general availability rolls out in 2026. His $860 price objective, based on a higher 39x EV/CY26E EBITDA multiple, is supported by an expectation of at least 20% annual growth driven by the core gaming ads business alone, which he views as providing meaningful downside protection to investors buying the stock now.

In another report released yesterday, Piper Sandler also reiterated a Buy rating on the stock with a $800.00 price target.

Based on the recent corporate insider activity of 105 insiders, corporate insider sentiment is negative on the stock. This means that over the past quarter there has been an increase of insiders selling their shares of APP in relation to earlier this year.