Twitter Inc (NYSE: TWTR) is selling its mobile advertising platform, MoPub, to AppLovin (Nasdaq: APP), a game developer and advertisement technology firm, in an all-cash deal worth $1.05 billion. Following the revelation, the stock of Twitter closed at $63.97, an increase of $2.68 or 4.37% from the previous close. Likewise, the stock of AppLovin ended Thursday’s trading session at $77, up $3.25 or 4.41% from earlier close. AppLovin commands a market valuation of $29 billion.
In September 2013, in an effort to boost revenue from mobile-focused advertisements, the social media platform provider acquired MoPub for roughly $350 million. The takeover was carried out just two months before Twitter got listed on NYSE.
The sale of MoPub to Palo Alto, California-based AppLovin, according to Twitter, was intended to expedite the advancement and growth of the products it owns and operates. Furthermore, the divestment is in accordance with the microblogging platform’s objective of attaining revenues of $7.50 billion by the end of 2023. The deal is anticipated to be completed by 2022.
The MoPub platform is utilized by 45,000 mobile apps and covers a potential audience of 1.5 billion people as per AppLovin’s statement. The agreement is anticipated to get completed in 2022.
In April 2021, Apple rolled out a new variant of its mobile operating system, iOS 14.50. The latest version has made monitoring user activity on iPads and iPhones a complex process for advertisers. This prompted Twitter to divest MoPub, which generated revenues of $188 million last year, reflecting 5.90% of the company’s advertising revenue and slightly over 5% of the aggregate sales.
AppLovin’s business is divided between games, which generate a significant portion of their money from the sale of virtual goods, and marketing systems that the rest of the game developers utilize for app promotion.
Established in 2011, AppLovin was initially devoted to promoting and generating money from mobile apps. Seven years later, the company got $2 billion in funding from private equity giant KKR to enter game development, primarily via takeovers.
Jack Dorsey, CEO of Twitter, has opined that the deal will enable the company to concentrate on its products and showcase optimism in revenue product plans. The CEO further stated that the divestment of MoPub will enable the company to rapidly invest in key products that will fuel the long-term growth of the company, while serving the expectations of people in the best possible manner.
Adam Foroughi, CEO of AppLovin, has expressed his happiness in getting an opportunity to improve the AppLovin platform and also the monetization tools for publishers with this strategic acquisition. While welcoming the core team of MoPub, Foroughi revealed that MoPub’s top features would be incorporated in the AppLovin platform.
Twitter has stated that it will release details on the likely financial impact of the divestment while publishing its third-quarter results on October 26th.
The divestment of MoPub is perceived as a good development for the company’s future. Therefore, the stock of Twitter is expected to remain bullish in the near term.
The historical price chart indicates that the stock of Twitter is rising after consolidating at 58 levels. The next resistance is anticipated only near 70. Additionally, the stochastics oscillator is near the oversold region. Therefore, we are anticipating the stock to remain in an uptrend in the days ahead.
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