Applovin Corporation (NASDAQ:APP) shares came under pressure on Monday following a Bloomberg report alleging that the company has been subject to inquiries from the U.S. Securities and Exchange Commission (SEC).
The report, which offered limited detail on the scope or timing of the investigations, triggered a sharp selloff in the stock.
BTIG analysts, led by Clark Lampen, downplayed the significance of the headlines, suggesting the inquiries likely stem from short-seller reports published earlier this year.
Also Read: AppLovin (APP) Stock Plunges As SEC Probes Data Practices: Report
Those reports, which accused the company of questionable ad practices such as "penny bidding" and "fingerprinting", were swiftly rebutted by AppLovin and have not been substantiated, BTIG noted.
Analysts added that big players such as Meta Platforms Inc. (NASDAQ:META), Alphabet Inc. (NASDAQ:GOOG) (NASDAQ:GOOGL), and Apple Inc. (NASDAQ:AAPL), who have complete visibility into how ads run on their platforms, would have intervened if AppLovin were actually engaging in any improper ad-tracking or bidding behavior.
BTIG maintained its Buy rating and $664 price forecast, calling the selloff a "headline-driven overreaction." The analysts reiterated their confidence in AppLovin's novel business model and monetization engine, which leverages scale, data, and technology to drive value across a billion daily active users, primarily through long-form, unskippable video inventory.
Analysts project fiscal 2025 revenue of $5.84 billion, up from $4.71 billion in fiscal 2024, and anticipate reaching $8.18 billion in revenue by fiscal 2026.
On profitability, adjusted EBITDA is estimated to be around $4.52 billion in 2025, up from $2.72 billion in 2024, and is expected to further increase to $6.84 billion in 2026.
Analysts also expect a significant improvement in earnings, with EPS rising from $4.54 in 2024 to $9.64 in 2025, and then to $15.90 in 2026.
BTIG values AppLovin based on its 2026E Software EBITDA, applying a 32.5x multiple and adjusting for an estimated $1.6 billion in net cash. This framework supports the firm's $664 price forecast, along with a range of $201 to $819.
APP Price Action: Applovin shares are enjoying a nice bump, up 8.27% to $635.57 at the time of publication on Tuesday.
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