AppLovin Corporation

This is our first report on AppLovin, a software giant known to operate a well-known platform for mobile app developers, helping them with the marketing and monetization of their apps. The company delivered an extremely disappointing result failing to meet Wall Street expectations with respect to revenues as well as earnings. The only silver lining has been the performance of AppDiscovery and Mediation which performed well in the quarter. The management looks to inspire some confidence in shareholders with a stock repurchase plan and has more than $400 million in available funds. However, the fact remains that AppLovin’s business is bound to be negatively impacted by lower levels of user immersion, competitive gameplay, and user retention in mobile gaming as against PC or console gaming. The company recently ended its pursuit to acquire Unity Software after a failed attempt. We initiate coverage on the stock of AppLovin Corporation with an ‘Underperform’ rating.