Regulatory and SEC Investigations Into Data Practices Might Change The Case For Investing In AppLovin (APP)

• In recent days, AppLovin has come under investigation by multiple state attorneys general and the SEC concerning its data collection and ad-targeting practices, which prompted the company to halt its "Array" product amid allegations related to user privacy and unauthorized installations.
• These regulatory probes, amplified by short sellers' public accusations of data misuse and national security concerns, have increased scrutiny on AppLovin’s business practices and raised material questions about its approach to data privacy and compliance.
• Now, we’ll examine how growing regulatory scrutiny around data practices could alter key risks in AppLovin’s investment narrative.

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AppLovin Investment Narrative Recap

To be an AppLovin shareholder today, you need confidence in its ability to sustain rapid growth as it diversifies from mobile gaming into new verticals like e-commerce advertising. However, the recent wave of investigations into AppLovin's data collection and ad-targeting practices could become a key risk in the short term, with potential implications for its ability to personalize ads and maintain revenue momentum. At present, regulatory scrutiny appears to be the most important factor affecting the business, as opposed to core product adoption or competitive threats.

Among recent announcements, AppLovin's decision to discontinue its "Array" product after allegations of unauthorized installations stands out, as it directly relates to the regulatory scrutiny that has emerged as a dominant theme. This move, alongside the ongoing probes, will likely shape both investor sentiment and the extent of operational changes required if privacy or compliance obligations tighten further.

But with regulatory risk now front and center, it's especially important to be aware of how global data privacy laws could limit AppLovin’s ability to...

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 is based on 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 $646.30 fair value, a 4% upside to its current price.

Exploring Other Perspectives

Twenty-five private investors in the Simply Wall St Community estimate AppLovin’s fair value from US$318.43 to US$663.26 per share. Given the focus on regulatory risk, some believe stricter data laws could affect future profit margins and expansion.

Explore 25 other fair value estimates on AppLovin - why the stock might be worth as much as 7% more 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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