By Nate Wolf
Buzzy, high-growth stocks like AppLovin often get a boost when sell-side analysts counsel investors to buy. That wasn't the case at all Wednesday.
Evercore ISI initiated coverage of AppLovin stock with an Outperform rating and an $835 price target on Wednesday, forecasting a 25% jump from Tuesday's closing price of $668.63. The company has momentum across its gaming and e-commerce ad businesses, and investors should expect a big quarterly earnings print next month, Evercore argued.
But AppLovin stock plummeted nearly 10% to $603.14 Wednesday morning, making it the worst stock in the S&P 500 for the session. A selloff across the technology sector drowned out the bullish research note: The iShares U.S. Technology exchange-traded fund, which counts AppLovin as its 20th largest holding, was down 1.8%.
AppLovin hasn't had a great run in the last month. It soared 104% in 2025, but endured a brutal losing streak to end the year and is now down 10% in 2026 through Wednesday.
But AppLovin's huge gains last year weren't without reason. For fiscal 2025, the company is on track to post 20% revenue growth and 65% growth in earnings before interest, taxes, depreciation, and amortization, according to consensus estimates. And Evercore doesn't see a slowdown any time soon.
"We believe that APP faces significant long-term growth runway from both its core mobile game user acquisition market opportunity and its emerging opportunity as a challenger for e-commerce advertising budgets, " wrote analysts led by Robert Coolbrith.
On the mobile gaming side, the overall market may expand by just single-digits in percentage terms over the next few years. But the user acquisition market is likely to grow at a faster clip, Evercore said, as improvements in in-game monetization and direct billing make each customer worth more to game publishers.
User acquisition is AppLovin's bread and butter. Evercore sees AppLovin continuing to gain share of user acquisition spending, helping to drive 23% projected annual revenue growth from gaming ads through 2028.
AppLovin is also gaining steam with its e-commerce advertising platform. It is too soon to tell if the company can rival Alphabet's Google, Meta Platforms, and Amazon.com as a leading digital marketing channel, Evercore said, but the signs are positive.
"Early anecdotal evidence on budget penetration and new advertiser adoption appears encouraging," Coolbrith wrote. He added that the platform has "a very large audience and inventory opportunity, attractive demographics, high-impact ad formats, and market-leading machine learning technology."
Investors will look for more e-commerce momentum when the company reports fourth-quarter earnings on Feb. 11. Evercore predicts they will get it. Longer-term, the firm is confident AppLovin can post 30% or higher annual revenue and Ebitda growth as it expands the e-commerce unit.
AppLovin stock isn't without risk. Most notably, the Securities and Exchange Commission is investigating allegations that AppLovin violated the service agreements of platform partners like Apple with its app-tracking practices, according to reports from last fall.
AppLovin declined to comment on the SEC investigation when Barron's reached out at the time, but CEO Adam Foroughi called similar claims by short-sellers "false and misleading" in a blog post last February.
The ultimate aim of the short-sellers, Evercore argued, is to deplatform AppLovin's development kits. The firm said that outcome is "highly unlikely." The SEC could target AppLovin in particular, which would admittedly be a problem for the company's e-commerce business.
But the agency could also implement stricter ad-tracking enforcement across the board. That scenario could see AppLovin gain market share, Evercore said, as its algorithm uses less consumer data than competing platforms.
Write to Nate Wolf at nate.wolf@barrons.com
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
January 14, 2026 11:24 ET (16:24 GMT)
Copyright (c) 2026 Dow Jones & Company, Inc.
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