15. AppLovin Corporation (NASDAQ:APP)
Number of Hedge Fund Holders: 51
Cramer suggested that AppLovin Corporation (NASDAQ:APP) has the potential to become a highly successful e-commerce company, given its strong performance in advertising within the video game industry.
“The biggest move, and I know you’re gonna think this is inflationary, is the staggering 907% windfall that comes from AppLovin, which makes software that helps app developers grow their reach and monetize their apps. It’s gone from $13 billion at the end of last year to $121 billion, although it was a lot higher on Friday, $142 billion.
Today, the stock got clobbered down 15% because it wasn’t added to the S&P 500, something many traders were expecting, anticipating, gambling on. AppLovin is adapting… and leaning in and pivoting and using its learning. There, worked in all the key buzzwords to become an early-stage e-commerce play that could be wildly successful. They’re so good with their mobile gaming technology that they’ve decided to go all in with video game advertising. These are free mobile games that make their money by showing you ads. Is that worth an almost tenfold gain? The short answer is no. You don’t rally that much in a simple line extension, but what if the same technology could be used for all of e-commerce? Now that’s a much more exciting story and it’s one being told right now.
I can’t fault anyone for suspending the rigor and believing there may be something very big here. Who cares if it might be pure magical thinking, certainly not the investors. Just look at how the stock soared last week when lots of speculators swooped in betting that AppLovin would be added to the S&P 500 after the close Friday. Now, by the way, that’s another thing that tends to happen to stocks worth north of a hundred billion. It didn’t happen. Now they’re getting clobbered.”
AppLovin (NASDAQ:APP) is a company that provides software solutions aimed at improving marketing and monetization strategies, primarily through tools for app measurement, analytics, and in-app bidding. It also runs a portfolio of free-to-play mobile games. The company’s management has expressed confidence in its ability to achieve growth rates of 20% to 30% in mobile game advertising over the near future.
Beyond its core business, the company is branching into new areas that could significantly accelerate its growth trajectory. The company is currently piloting an e-commerce advertising solution, and the early results have been promising. During the third earnings conference call, CEO Adam Foroughi mentioned that initial data had surpassed expectations, with advertisers in the pilot program reporting substantial returns, often exceeding the results from other media channels.
In many instances, advertisers have experienced nearly a 100% incrementality from the traffic driven by AppLovin’s platform. Based on these outcomes, AppLovin (NASDAQ:APP) is optimistic about the potential of this new vertical and expects it to scale considerably by 2025, becoming an important contributor to its revenue in the years to come.
