AppLovin's Axon Surge Signals Strong Q4, Says Analyst

Applovin Corporation (NASDAQ:APP) stock climbed Wednesday as new data pointed to accelerating adoption of its Axon advertising platform.

Channel checks suggest the company added several hundred e-commerce advertisers in December, reinforcing recent momentum and fueling optimism around fourth-quarter results.

Bank of America Securities analyst Omar Dessouky reiterated the Buy rating on the stock, with a price forecast of $860.

According to Benzinga Pro, APP stock has gained over 94% in the past year. Investors can gain exposure to the stock via Tradr 2X Long APP Daily ETF (NASDAQ:APPX).

E-Commerce Advertiser Base Expands

Analyst Dessouky wrote that AppLovin's Axon pixel footprint reached nearly 4,000 merchants, up about 13% month over month. His checks pointed to roughly 450 net tracker additions in December, extending the advertiser base.

Dessouky noted that 73% of new merchants came from Shopify, and 43% were Shopify Plus sites.

The analyst added that December's cohort skewed toward smaller merchants, suggesting deeper penetration into the long tail. Dessouky wrote that roughly 450 monthly e-commerce "referral" adds did not raise concerns for his model.

He said that pace matched his post-third-quarter view of about 400 new advertisers monthly through calendar 2026.

Fourth-Quarter Upside Drivers

Dessouky argued fourth-quarter e-commerce results could beat guidance for two key reasons. He said guidance may understate the new-advertiser ramp during November and December.

The analyst also said management likely had limited visibility into holiday budgets from pre-referral advertisers.

Dessouky wrote that agency feedback suggested spending can rise when returns beat initial budget plans.

He added that prospecting campaigns may have unlocked incremental demand from advertisers previously capped on customer acquisition.

Valuation

Dessouky wrote that the stock may stay rangebound until management comments on holiday e-commerce ad spending. He noted Northbeam data showed about a 60-basis-point week-over-week decline in Axon budget share in Christmas week.

Dessouky wrote that the stock's 28x EV to 2026 EBITDA looked attractive versus large-cap Rule-of-40 peers.

He added that self-service GA in the first half of 2026 could lift calendar 2026 estimates.

APP Price Action: AppLovin shares were up 3.12% at $636.49 at the time of publication on Wednesday, according to Benzinga Pro data.

Image via Shutterstock