Arete cuts AppLovin to Sell on ‘failing’ e-commerce growth story

Arete analyst David Mak downgraded AppLovin (APP) to Sell from Neutral with a $200 price target The stock in premarket trading is up 2%, or $7.28, to $334.51. The firm sees risks to AppLovin’s e-commerce growth story, saying it is “failing to provide compelling” return on ad spend at scale across typically low quality, long-tail mobile gaming ad inventory. Arete’s prior bull case for the e-commerce business has been priced into the stock, and consensus estimates “now appear too high on any reasonable view,” the analyst tells investors in a research note.