AppLovin (NASDAQ:APP) and Cheetah Mobile (NYSE:CMCM) Critical Review

Cheetah Mobile (NYSE:CMCM) and AppLovin (NASDAQ:APP) are both technology companies, but which is the superior stock? We will compare the two companies based on the strength of their profitability, valuation, risk, analyst recommendations, earnings, dividends and institutional ownership.

Profitability

This table compares Cheetah Mobile and AppLovin’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Cheetah Mobile	-28.11%	-8.54%	-3.22%
AppLovin	65.89%	182.97%	63.02%

Earnings & Valuation

This table compares Cheetah Mobile and AppLovin”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Cheetah Mobile	$164.51 million	0.41	-$36.85 million	($1.51)	-1.49
AppLovin	$5.48 billion	24.04	$3.33 billion	$14.86	26.49

AppLovin has higher revenue and earnings than Cheetah Mobile. Cheetah Mobile is trading at a lower price-to-earnings ratio than AppLovin, indicating that it is currently the more affordable of the two stocks.

Analyst Recommendations

This is a summary of current recommendations for Cheetah Mobile and AppLovin, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Cheetah Mobile	1	0	0	0	1.00
AppLovin	0	8	17	3	2.82

AppLovin has a consensus price target of $497.93, suggesting a potential upside of 26.48%. Given AppLovin’s stronger consensus rating and higher probable upside, analysts clearly believe AppLovin is more favorable than Cheetah Mobile.

Institutional & Insider Ownership

0.4% of Cheetah Mobile shares are held by institutional investors. Comparatively, 41.9% of AppLovin shares are held by institutional investors. 17.1% of Cheetah Mobile shares are held by insiders. Comparatively, 12.8% of AppLovin shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.

Volatility & Risk

Cheetah Mobile has a beta of 1.9, suggesting that its share price is 90% more volatile than the S&P 500. Comparatively, AppLovin has a beta of 2.51, suggesting that its share price is 151% more volatile than the S&P 500.

Summary

AppLovin beats Cheetah Mobile on 13 of the 14 factors compared between the two stocks.

About Cheetah Mobile

Cheetah Mobile Inc. was a Chinese internet company that developed and operated mobile applications and online services. Founded in 2009 through the combination of Kingsoft’s internet security business and Conew Image, the company focused initially on mobile security, system optimization and utility software. Its best-known products included Clean Master, Security Master, Battery Doctor and CM Browser, which offered device-cleaning, antivirus, privacy, battery-management and mobile browsing features.

About AppLovin

AppLovin is a technology company that provides software to help mobile app developers and advertisers grow their businesses. Its platform connects advertisers seeking users with app publishers looking to monetize their audiences, using data and machine-learning tools to support advertising and user acquisition. The company’s products include AXON, its advertising optimization engine; AppDiscovery, which helps advertisers find and acquire users; and MAX, a platform for managing in-app advertising.