Krypton Gold · Hard Technology | Can Weimob be China's AppLovin?

Author | Geng Chenfei

Editor | Song Wanxin

Cover Source | Company Official Website

After the market closed on February 12, AppLovin, the hottest tech stock in the US stock market last year, announced its fourth-quarter results. The company's revenue increased by 44% year-on-year to $1.37 billion, exceeding the market expectation of $1.26 billion; the net profit was $599 million, a year-on-year surge of 248%.

In the first trading day after the results, AppLovin's stock price soared by more than 38% at one point during the trading session, and its market value exceeded $170 billion. By the close of the day, AppLovin rose 24% to $471.7 per share.

The impact spread to the domestic market. Related concept stocks in the Hong Kong stock market and A-share market strengthened significantly. On February 13, Mobvista's stock price rose by more than 20% at one point during the trading session, and many individual stocks such as Weimob Inc., Yeahmobi, and BlueFocus were pulled up.

In the AI application layer, AppLovin is the "stock king" that emerged in the secondary market last year, with an increase even more than three times that of NVIDIA.

In January this year, AppLovin reached an e-commerce strategic cooperation with Yeahmobi, and Yeahmobi became its first-level e-commerce agent, responsible for the e-commerce agency business in the Greater China region. When AppLovin begins to enter the Chinese market, whether there can be potential stocks in China that can be compared with it has also become a hot topic in the market.

01 Is the Hundred-Billion Market Value a Bubble?

The market generally believes that the sharp rise in AppLovin's stock price this round is mainly driven by three factors: the launch of the AI advertising engine AXON 2.0 under the generative AI wave, the rapid growth of the mobile application advertising market, and the creation of a complete ecological closed loop.

"AppLovin is a comprehensive end-to-end software platform that creates value by helping companies reach users, expand their businesses, and maximize their revenues. Its software platform is supported by the AI-based recommendation engine AXON, enabling advertisers to automate their marketing, interaction, and monetization efforts," Cinda Securities pointed out.

In simple terms, in the mobile marketing industry, AppLovin acts as an "intermediary platform," connecting advertisers and publishers at both ends of the industrial chain, through personalized advertising forms, enabling advertisers to find the right users to meet the advertisers' placement needs, and providing users with more content that they may be interested in, helping publishers make rational use of advertising spaces.

The mobile application advertising market is like a gold mine. According to Statista data, in 2024, the mobile game advertising market that AppLovin particularly focuses on has reached the level of hundreds of billions of dollars, with a compound annual growth rate of 9.5% from 2024 to 2028.

Cinda Securities analysis believes that the sharp rise in AppLovin's stock price may indirectly confirm that the monetization ability of AI marketing far exceeds market expectations.

In terms of financial metrics, AppLovin's business can be divided into software platforms and applications. Software platform revenue mainly refers to advertising revenue, while the application business is mainly realized through in-app purchases and advertising in self-developed games that have been acquired and operated over the years.

From the financial report, the software platform department has become the core driving AppLovin's revenue growth. In the fourth quarter of fiscal year 2024, its advertising business revenue was $999.5 million, a year-on-year increase of 73%, and the profit margin was 78%; the application business revenue was $373.3 million, a year-on-year decrease of 1%.

Figure: AppLovin Software Platform Products; Source: Cinda Securities

From the perspective of business structure, AppLovin's complete ecological closed loop is its highest barrier. AppLovin, which simultaneously has a demand-side platform and an advertising aggregation platform, holds data on the entire advertising placement link, including the budget and bidding information of advertisers, the performance and bidding information of advertising spaces of traffic owners, and behavioral data such as user conversion rates.

Currently, AppLovin provides almost complete advertising intermediary services. With this data, AppLovin can also better train its own placement model AXON.

Another analysis points out that AppLovin's dual role in the advertising matching and advertising bidding fields is equivalent to being both an athlete and a referee.

Bidding and matching on MAX means that AppLovin can obtain the bidding information of other advertisers and bid for its own advertisers through AppDiscovery to win the bid at the lowest price. This model enables AppLovin to optimize the bidding algorithm while realizing profits through the price difference and thus pocket the additional revenue.

Figure: AppLovin Mobile Application Advertising Ecological Layout; Source: SPDB International

Bank of America previously listed AppLovin as the top pick in the gaming and advertising network sector in 2025, with a target price of $375 for the stock. Some investors also regard AppLovin as the "NVIDIA of the advertising industry."

However, it is worth noting that the high valuation implies an aggressive growth assumption in the market.

Some analysts predict that in fiscal year 2024, AppLovin's profit will increase by 315% to $4.06 per share, nearly 50% in 2025, and more than 35% in 2026. However, the management's expected annual growth rate of 20%-30% for the advertising business in the earnings conference is significantly different from the market's high growth assumption. If the growth rate slows as expected in 2025, the current premium valuation will no longer be reasonable.

From the perspective of actual performance and industry position, the contradiction is more prominent.

In 2024, AppLovin's revenue was only $4.7 billion (including self-developed game business). But in the fourth quarter of 2024 alone, Meta's advertising revenue reached $46.8 billion, nearly 10 times AppLovin's annual revenue. According to CSIMarket data, in the third quarter of 2024, AppLovin's market share relative to its competitors was only 0.34%.

The inversion of scale and market value indicates that AppLovin relies on technological narratives rather than a substantial market position.

The deeper risk lies in AppLovin's business structure. Currently, AppLovin's advertising revenue is still concentrated in the gaming field, especially in the already saturated hyper-casual games.

Analyst Lauren Balik said in a bearish report that AppLovin's total revenue increased by less than 50% from the third quarter of 2023 to the third quarter of 2024, but its net profit increased significantly by 291% during the same period. Such data looks very strong on the surface, but these profit growths rely more on false click traffic and short-term advertising revenue rather than user stickiness and game content.

Currently, AppLovin is also seeking new growth points in the e-commerce business to counter the risk of the gaming ceiling. The latest news shows that AppLovin sold 10 game studios for $900 million and divested its game business.