Needham & Company moved AppLovin to a Buy rating on Monday, saying additional analysis has increased its confidence in the company’s e-commerce revenue path for 2026 as the stock trades notably below last month’s highs.
Analyst Bernie McTernan also raised the firm’s price target on AppLovin to $700. Needham said its updated work on the company’s e-commerce business led to the upgrade and the higher target.
In the firm’s revised outlook, Needham now projects $1.45 billion in e-commerce revenue for 2026, an increase from its earlier $1.05 billion forecast. The firm cited sequential momentum that it expects in the first quarter, saying this growth should "more than offset typical 1Q seasonality." Needham’s modeling shows e-commerce revenue rising from $191 million in the fourth quarter to $251 million in the first quarter, a departure from the prior assumption of flat sequential growth.
Needham noted that feedback from brands and agencies has added to the positive indicators for the platform. The firm pointed to new data showing two major names, Kalshi and Etsy, either joining or testing the AppLovin platform, which it said expands a roster that already includes Crocs, Reebok, Yeti and Skims.
Although Needham raised its estimates, the analysts left open the possibility of further upside if AppLovin’s e-commerce buildout tracks a trajectory similar to that of TikTok. The firm explicitly described such a scenario as potential upside, indicating that actual results could exceed their current upgraded forecasts.
Needham also highlighted industry-level tailwinds supporting mobile ad spending, including improved ad formats, increasing demand for playables and rewarded video, and the rise of AI-driven applications that could boost mobile monetization.
The firm’s upgrade and higher price target come as AppLovin’s shares remain below recent highs, a point Needham underscored in explaining the timing of its rating change.
Summary
Needham upgraded AppLovin to Buy and raised its price target to $700 after revising 2026 e-commerce revenue higher to $1.45 billion from $1.05 billion. The firm expects sequential strength into the first quarter, cites positive brand feedback and notes industry tailwinds that could support mobile ad monetization. Needham also flagged additional upside if AppLovin’s e-commerce ramp follows a trajectory similar to TikTok.
Key points
- Needham upgraded AppLovin to Buy and boosted its price target to $700 based on updated e-commerce analysis.
- The firm now forecasts $1.45 billion in e-commerce revenue for 2026, up from $1.05 billion previously, and expects first-quarter sequential growth from $191 million in Q4 to $251 million in Q1.
- Industry tailwinds cited include improved ad formats, rising demand for playables and rewarded video, and AI-driven apps increasing mobile spending; new brand tests or sign-ons include Kalshi and Etsy, alongside Crocs, Reebok, Yeti and Skims.
Risks and uncertainties
- Forecast uncertainty - The firm’s upgraded figures are subject to the usual forecasting risk, and Needham itself notes there is potential upside if the e-commerce ramp differs materially from its base case.
- Platform adoption - Continued positive feedback from brands and agencies is cited, but broader adoption and the pace at which brands scale on the platform remain uncertain.
- Seasonality and sequential behavior - While Needham expects first-quarter sequential growth to more than offset typical 1Q seasonality, seasonality patterns still represent a risk to near-term revenue timing.