Shares of AppLovin Corporation (NASDAQ:APP) advanced on Wednesday as emerging data underscored a rapid expansion in the use of its Axon advertising platform. Recent channel checks revealed that the company integrated several hundred new e-commerce advertisers in December alone, reflecting continued momentum that has stimulated investor confidence regarding the upcoming fourth-quarter financial results.
Omar Dessouky, an analyst at Bank of America Securities, reaffirmed his Buy recommendation on AppLovin, assigning an $860 price target to the stock. Over the past year, AppLovin's shares have surged by more than 94%, demonstrating significant growth and capturing investor interest. Exposure to AppLovin stock is additionally accessible through the Tradr 2X Long APP Daily ETF (NASDAQ:APPX), which also saw trading activity correlated with the parent company’s performance.
Expansion of E-Commerce Advertiser Network
According to Dessouky, AppLovin’s Axon pixel footprint expanded to encompass approximately 4,000 merchants, marking an approximate 13% month-over-month increase. Detailed checks indicate that about 450 net advertisers were added in December, further enlarging the company's advertiser ecosystem. Notably, 73% of these new merchants operated through Shopify, with 43% affiliated with Shopify Plus accounts.
This recent cohort of advertisers skewed towards smaller merchants, suggesting AppLovin’s strategy toward deeper penetration into the long tail of the e-commerce market is progressing. Dessouky highlighted that the addition of roughly 450 monthly e-commerce 'referral' advertisers in December aligns well with his financial model, with no cause for concern. He also noted this growth rate is consistent with his outlook established after the third quarter, which forecasted about 400 new advertisers monthly continuing through calendar year 2026.
Potential Fourth-Quarter Performance Strengths
Dessouky identified two key factors that might drive performance beyond current fourth-quarter guidance. Firstly, the official guidance may not fully capture the acceleration in new advertiser onboarding during the holiday-heavy months of November and December. Secondly, management’s visibility into holiday campaign budgets for pre-referral advertisers was probably limited, possibly leading to conservative forecasts.
Feedback from agencies further suggests that marketing spend can increase when returns exceed initial budget expectations. In addition, prospecting campaigns appear to have unlocked additional demand from advertisers who had previously faced constraints on customer acquisition, potentially supporting higher spending and improved results.
Valuation and Market Dynamics
While the stock's valuation may experience range-bound movement until the company provides clearer commentary on holiday e-commerce ad expenditure, current metrics are compelling. Northbeam data recorded a modest 60 basis-point week-over-week dip in Axon’s budget share during Christmas week.
From a valuation perspective, the stock's enterprise value to 2026 EBITDA ratio stands at approximately 28 times, which Dessouky views as attractive relative to comparable large-cap 'Rule of 40' peers. Additionally, he anticipates that the adoption of self-service general availability in the first half of 2026 could contribute to upward revisions in calendar year 2026 estimates.
At the time of publication, AppLovin's share price was reported at $636.49, up 3.12% for the session, as per data from Benzinga Pro.