AppLovin Corp. (APP) is picking up serious momentum in e-commerce, and the data suggests something interesting might be brewing for the fourth quarter.
The company's Axon advertising technology is seeing a notable surge in merchant adoption, the kind of uptick that tends to show up in revenue numbers a few weeks later. That matters especially now, because Wall Street has been quietly dialing back its expectations for year-end performance.
Bank of America Securities analyst Omar Dessouky is staying bullish, reiterating his Buy rating on AppLovin with an $860 price target—roughly 32% above the recent $653 price. His thesis boils down to this: Axon's e-commerce expansion is moving from testing phase to real adoption, and the fourth quarter could deliver results that outpace the recently softened consensus.
Merchant Numbers Tell the Story
Here's where it gets interesting. Dessouky tracked Axon's pixel footprint across e-commerce merchant sites using third-party data, and the November numbers jumped about 25% month-over-month. Total installations climbed to roughly 3,500 merchants by the end of November, up from around 800 at the end of September. That's a significant acceleration.
Most of the new activity came through Shopify merchants, which accounted for close to 80% of fresh pixel installations. Triplewhale data added another data point: 413 active shops were advertising through November, showing strong onboarding momentum since early October.
The takeaway? The advertiser base is expanding heading into the holiday shopping season, which is exactly when you want that kind of growth.
Why Q4 Could Surprise
Dessouky thinks fourth-quarter 2025 expectations softened after the third-quarter results because management's guidance didn't fully account for spending from advertisers who came onboard during November and December. That creates an interesting setup.
He's maintaining his $340 million e-commerce net revenue outlook for the quarter, even assuming the newest cohort of advertisers spent less than $20 million through October 31 and tends to be smaller in terms of gross merchandise value.
The math here isn't particularly demanding. If merchants average roughly $2,000 in daily spending, that supports his forecast—and leaves plenty of room for upside if engagement holds steady or accelerates.
Management commentary has been encouraging too. On December 3, 2025, executives laid out a few important points: Axon e-commerce should be available to all merchants in the first half of 2026, prospecting campaigns are performing extremely well, and there's a multi-year opportunity to increase ad load as ad durations get shorter.
Dessouky's $860 price objective is based on 39 times EV-to-2026 estimated EBITDA, with at least 20% year-over-year growth underpinned by gaming advertising alone. The e-commerce expansion is essentially upside to that base case.
APP Price Action: AppLovin shares traded up 1.06% at $659.91 at the time of publication on Wednesday.
