AppLovin’s Ecommerce Growth Soft In June, Says BofA Citing Third-Party Data

AppLovin experienced a slowdown in its e-commerce expansion during June, with third-party data indicating a drop in new pixel additions compared to the previous month. Despite this deceleration, Bank of America maintains a bullish outlook, noting that the figures represent only the initial weeks of the company's general availability to e-commerce advertisers. This development is significant for the retail sector as it highlights the early-stage volatility and growth potential of AppLovin’s digital advertising tools for online merchants.

Bank of America reported that AppLovin added approximately 750 new pixels in June, a decrease from the 950 net additions recorded in May. This data, sourced from third-party tracking, contributed to a significant sell-off in the company’s stock, which fell more than 12% and marked its fifth consecutive day of losses. However, analysts at Bank of America emphasized that these metrics only cover the first two weeks of the platform's general availability to the e-commerce sector, suggesting it is premature to draw definitive conclusions about the long-term trajectory of the company's retail-focused advertising business.

Contrasting the soft June data, Citigroup reiterated its positive stance on AppLovin, citing figures from Store Leads that show a more robust recent performance. As of July 10, AppLovin reportedly served 10,471 e-commerce clients, representing a 2.4% increase from the preceding week. This discrepancy in data points underscores the volatile nature of early-stage adoption metrics for digital advertising platforms targeting the retail market. Despite the recent dip, the majority of analysts remain optimistic, with 29 out of 32 tracked by Koyfin maintaining a "Buy" rating or higher.

From a valuation perspective, Bank of America views AppLovin’s current pricing as reasonable at 17 times its projected 2027 EBITDA. The firm maintained a $705 price target, implying a 39% upside, and noted that the company’s core gaming segment continues to grow at a rate exceeding 20% year-over-year. Within the retail community on Stocktwits, sentiment has shifted from bearish to bullish, with many investors characterizing the recent stock price decline as "overdone." This suggests that while short-term e-commerce growth metrics may fluctuate, the broader market still sees significant value in AppLovin's expansion into the retail advertising space.