AppLovin Corporation (APP) shares climbed Wednesday after fresh data revealed accelerating adoption of its Axon advertising platform. Channel checks suggest the company pulled in several hundred new e-commerce advertisers during December, reinforcing recent momentum and raising expectations for a strong fourth quarter.
Bank of America Securities analyst Omar Dessouky maintained his Buy rating on the stock with a price target of $860. According to market data, APP stock has surged over 94% in the past year. Investors looking for leveraged exposure can consider Tradr 2X Long APP Daily ETF (APPX).
The Advertiser Base Keeps Growing
Here's what Dessouky's research uncovered: AppLovin's Axon pixel footprint now spans nearly 4,000 merchants, reflecting roughly 13% month-over-month growth. His checks pointed to about 450 net tracker additions in December alone, a sign the platform continues expanding its reach.
The composition tells an interesting story. Dessouky noted that 73% of new merchants came from Shopify, with 43% being Shopify Plus sites. December's cohort tilted toward smaller merchants, suggesting AppLovin is successfully penetrating the long tail of e-commerce. That pace of roughly 450 monthly e-commerce referral additions aligns with Dessouky's post-third-quarter expectations of about 400 new advertisers monthly through calendar 2026, so it's not raising red flags for his model.
Why Q4 Could Beat Expectations
Dessouky makes the case that fourth-quarter e-commerce results could come in ahead of guidance for two reasons. First, guidance may have underestimated how quickly new advertisers would ramp during November and December. Second, management likely had limited visibility into holiday budgets from pre-referral advertisers when they initially set expectations.
Agency feedback suggests something interesting happens during the holidays: when returns beat initial budget plans, spending tends to increase. Dessouky also pointed out that prospecting campaigns may have unlocked incremental demand from advertisers who were previously capped on customer acquisition spend.
What the Valuation Says
Despite the positive data, Dessouky thinks the stock may stay rangebound until management offers commentary on holiday e-commerce ad spending. He noted that Northbeam data showed about a 60-basis-point week-over-week decline in Axon budget share during Christmas week, which could temper near-term enthusiasm.
That said, the analyst believes the valuation looks attractive. At 28 times EV to 2026 EBITDA, AppLovin trades at a reasonable multiple compared to large-cap Rule-of-40 peers. Dessouky added that a self-service general availability launch in the first half of 2026 could provide another catalyst to lift calendar 2026 estimates.
APP Price Action: AppLovin shares were up 3.12% at $636.49 at the time of publication on Wednesday.
