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Better AdTech Stock: AppLovin vs. The Trade Desk
APPApplovin(APP) The Motley Fool·2025-03-22 09:45

Industry Overview - The advertising technology (adtech) sector is a rapidly growing market with a total addressable market approaching 1trillion,drivenbyconstantmediacontentconsumptionandmonetizationopportunities[1]−CompanieslikeAppLovinandTheTradeDeskarekeyplayers,enablingbrandsandpublisherstocapitalizeonaudienceinteractions[1]AppLovin−AppLovinspecializesinmobileadtech,particularlycateringtogamingappdeveloperslookingtomonetizeuseractivity[3]−TheAppLovinExchangeoperatesasareal−timebiddingplatform,connectingapppublisherswithadvertisersforlarge−scaleadinventorytransactions[4]−FortheyearendingDecember31,2024,AppLovin′sadvertisingrevenueincreasedby751 trillion, driven by constant media content consumption and monetization opportunities [1] - Companies like AppLovin and The Trade Desk are key players, enabling brands and publishers to capitalize on audience interactions [1] AppLovin - AppLovin specializes in mobile adtech, particularly catering to gaming app developers looking to monetize user activity [3] - The AppLovin Exchange operates as a real-time bidding platform, connecting app publishers with advertisers for large-scale ad inventory transactions [4] - For the year ending December 31, 2024, AppLovin's advertising revenue increased by 75% year-over-year, with net income soaring by 343% [5] - Projections for 2025 indicate a revenue growth of 21% and an estimated 69% increase in earnings per share (EPS) to 7.65 [5] - AppLovin aims to expand into new advertising verticals such as e-commerce and connected TV (CTV), diversifying beyond gaming [6][7] The Trade Desk - The Trade Desk focuses on the buyer side of advertising, working with major brands and advertising agencies, which enhances its competitive position [8] - In 2024, The Trade Desk's revenue grew by 26%, and adjusted EPS increased by 32% compared to 2023, although results fell short of Wall Street expectations [9] - The Trade Desk's valuation has become more attractive, trading at 9 times the consensus 2025 revenue, compared to AppLovin's 17 times [10] - The forward price-to-earnings (P/E) ratio for The Trade Desk is 30, which is lower than AppLovin's 36, suggesting better value for investors [10] Comparative Analysis - AppLovin is viewed as having stronger growth momentum and potential for global expansion, making it a more favorable investment option at this time [13] - The Trade Desk's recent performance issues may be temporary, and its technology platform in CTV advertising could offer long-term value [11]