Morgan Stanley reiterated an Overweight rating on AppLovin Corp (NASDAQ:APP) with a $720.00 price target. The company, valued at $172.75 billion, has shown exceptional growth with revenue surging 66% over the last twelve months to $6.16 billion.
The firm said AppLovin can sustain above-market growth by expanding its conversion rate, as approximately 99% of its ads still do not generate a conversion. A 10x conversion rate gap exists between AppLovin and market leaders, implying significant headroom.
Improvements would stem from scale and data advantages, continued mix shift into non-endemic ads, and lower repeat rates. AppLovin's conversion rate has expanded 30 basis points over the last 18 months. Each additional 10 basis points would drive 17 points of net revenue growth.
If AppLovin maintains 20 basis points of annual conversion rate expansion, it could see revenue and EBITDA approximately 50% above consensus by 2030, putting Morgan Stanley's $1,100 bull case in play. The company's impressive 88% gross profit margin supports its ability to invest in conversion optimization.
In recent news, AppLovin reported strong Q1 2026 results, beating earnings and revenue forecasts. EPS of $3.56 exceeded the expected $3.42, while revenue of $1.84 billion topped the forecast of $1.78 billion. Several analysts raised price targets, including Piper Sandler ($665), Wolfe Research ($580), Goldman Sachs ($585), and Jefferies ($700).
