Is the SEC Probe a Critical Test for AppLovin’s (APP) Data Practices and Trust With Partners?

• Recently, news emerged that the U.S. Securities and Exchange Commission is investigating AppLovin’s data collection practices following allegations of violations related to targeted advertising agreements with platform partners.
• This regulatory development has heightened uncertainty about future compliance risks for AppLovin, even as it continues to pursue growth in advertising technology and e-commerce.
• We’ll consider how the SEC’s data-collection inquiry poses new business risks for AppLovin and its evolving investment narrative.

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AppLovin Investment Narrative Recap

For investors to remain confident in AppLovin, it's essential to believe in the company's ability to scale its advertising technology platform, expand beyond gaming, and capture the structural growth in global digital advertising. The recent SEC investigation into data-collection practices directly spotlights the primary business risk, regulatory scrutiny over data use, and creates headline uncertainty, though it does not currently appear to impact the near-term catalyst: adoption of the AXON Ads Manager in new verticals.

Against this regulatory backdrop, the rollout of AppLovin’s AXON Ads Manager for e-commerce stands out. By enabling thousands of new advertisers onto the platform and broadening revenue streams, this launch is central to the company’s growth thesis and may help offset uncertainty arising from the investigation.

Yet in sharp contrast to ongoing AI-driven revenue expansion, investors should be aware that any further regulatory action...

Read the full narrative on AppLovin (it's free!)

AppLovin's outlook projects $10.5 billion in revenue and $6.2 billion in earnings by 2028. This scenario assumes a 22.2% annual revenue growth rate and a $3.7 billion increase in earnings from the current $2.5 billion.

Uncover how AppLovin's forecasts yield a $613.59 fair value, in line with its current price.

Exploring Other Perspectives

Twenty-five members of the Simply Wall St Community valued AppLovin anywhere between US$318 and US$663 per share. Yet with regulatory challenges now front and center, your assessment of compliance risk may influence where you stand in this wide range.

Explore 25 other fair value estimates on AppLovin - why the stock might be worth 47% less than the current price!

Build Your Own AppLovin Narrative

Disagree with existing narratives? Create your own in under 3 minutes - extraordinary investment returns rarely come from following the herd.

• A great starting point for your AppLovin research is our analysis highlighting 2 key rewards and 2 important warning signs that could impact your investment decision.
• Our free AppLovin research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate AppLovin's overall financial health at a glance.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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