BTIG cuts AppLovin stock price target on commerce strategy shift

BTIG has reduced its price target on AppLovin Corp (NASDAQ:APP) stock from $574 to $408 while keeping the Buy rating intact. The stock is currently trading at $318.68, nearing its 52-week low of $318.12. This price target cut comes after a meeting at AppLovin's headquarters in Palo Alto, California, where the company unveiled a shift in its go-to-market strategy for its Commerce business unit and shared gaming performance for the second quarter.

BTIG's reduced target accounting for more conservative revenue growth expectations and a lower medium-term compound annual growth rate (CAGR) than previously anticipated. The firm warns that future growth may be less predictable quarter by quarter due to improvements in the company's model becoming the primary growth driver. BTIG suggests that investors should focus on signs of progress with partnerships and the transition towards a hybrid large language model (LLM)/recommendation system model in a rising inventory-cost environment.

Despite the price target adjustment, BTIG maintains its Buy rating, stating that the current share price already factors in little to no value for the company's commerce operations, while valuing the gaming arm at a discount to a more conservative medium-term growth profile. The company's fundamentals remain robust, with an 88.5% gross profit margin and 60.6% revenue growth, trading at a low PEG ratio of 0.28, according to InvestingPro analysis.

AppLovin's recent earnings report showed a shortfall, missing revenue and EBITDA guidance by 30 and 100 basis points respectively. As a result, analysts from Piper Sandler and BofA Securities have downgraded the stock to Neutral from Overweight and Buy, respectively, citing concerns over the sustainability of long-term revenue growth, particularly in the Consumer segment.

However, other firms like Phillip Securities and Needham have kept a positive outlook on AppLovin, maintaining Buy ratings while adjusting price targets. Scotiabank further reduced its price target to $515 from $775, highlighting model timing issues and disappointing second-quarter 2026 results. The mixed reactions from various analyst firms highlight the varied opinions on AppLovin's financial health and growth potential.