AppLovin Corp, the Palo Alto, California-based mobile app and gaming company, has priced its initial public offering at $80, which puts the company’s valuation at $28.64 billion.
The $80 offer a share is the midpoint of its previously set range of $75-$85. The private equity backs the company gains KKR&Co Inc and will raise $2 billion through the IPO. The company sold 22.5 million Class A common shares, selling stockholders offered the remaining 2.5 million shares. It is keeping a stake worth $8.6bn. KKR will also retain 67.4 percent of the company’s voting power.
Applovin is the latest mobile gaming company to go public and list on the stock market following the sharp spike in the popularity of video games during the pandemic year. Earlier, Roblox joined the New York Stock Exchange last month and Israeli mobile game developer Playtika listed on Nasdaq in January. Roblox was the largest direct listing of a tech company to date.
AppLovin has some popular games under its umbrella, such as Wordcapes and Machington Mansion. It has now over 410 million daily active users on its platform, and its apps consist of more than 200 free-to-play mobile games, including Word Connect, Slap Kings, Wordcapes ,Machington Mansion and Bingo Story.
The company will be listed on the Nasdaq Global Select Market under the ticker symbol “APP”. It is expected to begin trading on the Nasdaq Global Select Market on April 15.
Morgan Stanley, J.P. Morgan, KKR Capital Markets, LLC, BofA Securities and Citigroup are the lead underwriters for the offering.
AppLovin said its revenue reached $1.45bn last year, up 46 percent on 2019, although it lost $126m compared with a net income of $119m the previous year. According to its prospectus filed with the regulatory authorities, it had compounded annual revenue growth of 76 percent from 2016-2020.
AppLovin’s global technology platform provides developers a powerful, integrated set of solutions to grow their businesses. AppLovin enables developers to market and publish their apps. Its studios create popular, immersive content and its technology bring that content to users around the world.
Analysts are skeptical that this phenomenal growth will continue after the pandemic dies down and people come out of their lockdown and prolonged forced inactivity. Growth is expected to slow down in 2021, with the number of hours users spend on the platform expected to decrease as much as 11 percent in the second quarter.
On top of an anticipated slowdown in growth, the industry also faces headwinds from tighter advertising and privacy rules that Apple is scheduled to integrate into its App Store in the coming months. Craig Chapple, a strategist with research group Sensor Tower, said that would be a big damper on the mobile gaming industry. But he added, “AppLovin might be better positioned to manage them because of its dual revenue stream from operating games and selling its development tools to others.”
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