AppLovin Corporation

(NASDAQ Global Select)
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Slightly Bearish -15

AppLovin Took Unity to Court Over Ad Data. Hereโ€™s Where the Stock Could Go by 2030

Analyst downgrade Lawsuit AI-generated analysis

๐Ÿ“‰ AppLovin is facing a legal battle with Unity Software over alleged trade secret misappropriation and unauthorized collection of ad auction data from its MAX platform.

๐Ÿ’ฐ The company reported $1.61 billion in Q2 adjusted EBITDA on $1.92 billion of revenue, trading at 12.29x NTM EV/EBITDA as of the October 1 close.

๐Ÿ“‰ Analysts have cut FY2027 revenue consensus by 3.88% to around $10.2 billion and FY2028 by 6.13% to around $12.6 billion due to competition concerns.

๐Ÿ“ˆ Q3 guidance implies growth of 46% to 48%, a deceleration from the 52.82% growth rate achieved in Q2.

โš–๏ธ AppLovin filed for a temporary restraining order and opened JAMS arbitration, alleging Unity's data collection causes irreparable damage beyond what an award can fix.

๐Ÿ“‰ Investors are paying less per dollar of forward EBITDA for AppLovin compared to Magnite, a company worth about 4% of AppLovin's market value.

๐Ÿ”ฎ A mid-case projection estimates the stock could reach $566 by December 31, 2030, implying an annualized IRR of roughly 18%.

โš ๏ธ The primary risk identified is Unity and other rivals winning more of AppLovin's own MAX auctions, which would directly slow projected earnings growth.

๐Ÿ—“๏ธ A key upcoming checkpoint is the October 23 hearing on sealing court records, which could reveal more details about the dispute.

๐Ÿ›๏ธ A securities class action covering purchases from February to August 2026 remains pending with allegations currently unproven.

Bullish Signals
  • AppLovin reported strong Q2 adjusted EBITDA of $1.61 billion on $1.92 billion of revenue, demonstrating robust profitability.
  • The company's mid-case valuation model projects a stock price of $566 by December 31, 2030, representing a potential total return of approximately 101%.
Risk Factors
  • Analysts cut FY2027 revenue consensus by 3.88% and FY2028 by 6.13% due to concerns that rivals like Unity are winning more of AppLovin's MAX auctions.
  • Q3 guidance implies growth deceleration from 52.82% in Q2 to between 46% and 48%, signaling potential market share erosion or competitive pressure.
  • The ongoing legal dispute with Unity Software over ad data collection creates significant uncertainty regarding the integrity of AppLovin's auction platform.
Full Analysis
AppLovin (APP) is engaged in a significant legal dispute with Unity Software regarding the collection of ad data from AppLovin's MAX mediation platform. The company filed for a temporary restraining order and initiated arbitration, alleging that Unity misappropriated trade secrets by collecting clearing prices and auction identifiers. While Unity claims the lawsuit is an intimidation tactic by a dominant incumbent, AppLovin maintains that unauthorized data collection could cause irreparable damage to its business model that cannot be fixed solely by an arbitration award. Financially, AppLovin reported $1.61 billion in Q2 adjusted EBITDA on $1.92 billion of revenue, trading at 12.29x NTM EV/EBITDA. However, the legal uncertainty has impacted analyst sentiment, leading to a downward revision of FY2027 revenue consensus by 3.88% and FY2028 by 6.13%. Additionally, Q3 guidance implies growth slowing from 52.82% in Q2 to between 46% and 48%, reflecting investor concerns that rivals like Unity may be winning more of AppLovin's own MAX auctions. Despite the legal headwinds and valuation discount relative to rival Magnite, a mid-case projection suggests the stock could reach $566 by December 31, 2030, representing a potential total return of approximately 101%. This outlook relies on earnings growth rather than a multiple re-rating, with EPS expected to rise around 19% annually. The primary risk remains the success of Unity's competitive position within AppLovin's ecosystem, which could materially slow future revenue growth if arbitration outcomes are unfavorable or data collection continues unchecked.