Needham upgrades AppLovin, sees stronger e-commerce growth and ‘potential upside’

Investing.com -- AppLovin was upgraded to Buy at Needham & Company on Monday, with analysts citing growing confidence in the company’s e-commerce trajectory for 2026 as the stock trades well below last month’s highs.

Analyst Bernie McTernan raised the firm’s price target on the stock to $700, saying its latest analysis suggests e-commerce revenue growth will be stronger than previously expected.

“We upgrade APP to Buy… following additional work on ecommerce giving us more confidence in the trajectory of ecommerce revenue growth in ’26E,” Needham wrote.

The firm said it now forecasts $1.45 billion in e-commerce revenue for 2026, up from its prior $1.05 billion estimate, noting that sequential growth in the first quarter should “more than offset typical 1Q seasonality.”

Needham’s analysis indicates that e-commerce revenue will rise from $191 million in the fourth quarter to $251 million in the first quarter, a sharp shift from its earlier assumption of flat growth. Feedback from brands and agencies also “adds to the list of positive feedback on the platform,” the firm said.

Despite the raised estimates, Needham argued there is “potential upside” if AppLovin’s e-commerce ramp resembles “a similar trajectory as TikTok.”

The analysts also pointed to industry tailwinds, including improved ad formats, rising demand for playables and rewarded video, and AI-driven apps boosting mobile spending.

Needham said new data shows two major brands, Kalshi and Etsy, joining or testing the platform, adding to a roster that includes Crocs, Reebok, Yeti and Skims.

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