Investing.com -- Macquarie has initiated coverage of AppLovin with an outperform rating and a $710 price target, arguing in a note that the mobile advertising technology company's expansion into e-commerce represents a significant and underappreciated growth opportunity despite a sharp year-to-date decline in the stock.

Analyst Aaron Lee told investors that AppLovin's move into e-commerce advertising is "an attractive, multi-year growth opportunity," estimating a total addressable market of $120 billion that could grow to $180 billion by 2030.

Ahead of the full first-half 2026 e-commerce launch, Macquarie said channel checks gave the firm confidence that AppLovin has built a competitive advertising solution.

Lee highlighted AppLovin's existing mobile advertising dominance as the foundation for the e-commerce push, noting that its MAX platform is the dominant mediation solution in mobile gaming and that the Axon AI model has driven roughly 75% compound annual revenue and EBITDA growth over the past three years.

On valuation, Macquarie pointed to the stock's 40% year-to-date decline as an entry point.

"At these levels, we believe concerns around AI and competition are reflected in shares, and see the pullback as an attractive opportunity to build a position ahead of the upcoming full launch of the e-commerce platform," Lee wrote.

“AppLovin handily surpasses Software's Rule of 40. Advertising revenue growth of 70% and EBITDA margin of 82% for 2025 imply APP is meeting Rule of 150,” the analyst added.

Macquarie forecast three-year revenue and EBITDA CAGRs of 37%, reaching EBITDA of $11.6 billion by 2028, and acknowledged forecasts could prove conservative depending on the pace of e-commerce scaling.