Move Over The Trade Desk, This Is Wall Street's New Favorite Adtech Stock

Core Viewpoint - The Trade Desk has experienced significant revenue growth and is projected to continue growing at over 20% annually, while AppLovin is rapidly gaining market capitalization and attention in the adtech space, with a focus on its software business and expansion into new sectors [1][4][13]. Company Overview - The Trade Desk went public in 2016 and has seen its stock price increase over 4,000% since then, indicating strong investor interest and a successful business model [1][3]. - AppLovin's market capitalization is approaching $100 billion, showcasing its rapid growth compared to The Trade Desk, which took eight years to reach a market cap of over$60 billion [4]. Business Model - The Trade Desk partners with advertisers to place ads through real-time auctions, targeting specific audience demographics based on publisher data [2]. - AppLovin operates a dual business model, with a significant focus on mobile app development and a growing software segment that utilizes AI to optimize ad placements [8][9]. Revenue Growth - AppLovin's software revenue grew by 59% year-over-year in the same quarter it reported a 2% decline in overall revenue, highlighting the strength of its software business [9]. - Following the launch of Axon 2.0, AppLovin's software revenue growth accelerated, with year-over-year growth rates reaching as high as 91% [10]. Profitability - AppLovin has generated $1.7 billion in free cash flow over the last 12 months, reflecting a profit margin of around 40%, which is exceptional in the industry [11]. Future Prospects - AppLovin is exploring expansion into the e-commerce app sector, with initial results being promising, and management believes it can sustain over 20% annual revenue growth while maintaining profit margins [12][13].