A man plays a game on a smartphone.
Brent Levin | Bloomberg | Getty Images
AppLovin, the U.S. mobile app and gaming company backed by private equity firm KKR, has hired Morgan Stanley to lead preparations for an initial public offering (IPO) which could come early in 2021, according to people familiar with the matter.
The company has flirted with the idea of an IPO for years, but had never taken a concrete preparatory step. It is the latest mobile gaming startup to eye a stock market listing, as demand for video games surges among consumers staying at home during the COVID-19 pandemic.
The sources requested anonymity because the IPO preparations are confidential and cautioned that the plans are subject to market conditions.
“Today gaming is a fractured, fragmented market. I think the market will consolidate, and I think AppLovin will be one of those consolidators,” Ted Oberwager, a managing director in KKR’s technology, media and telecommunications team and an AppLovin board member, said in an interview. He declined to comment on the IPO plans.
AppLovin and Morgan Stanley declined to comment.
AppLovin has been profitable since it was founded in 2012 as a mobile games advertising platform. It expects to generate roughly $1.5 billion in revenue for 2020, according to one of the sources, who is familiar with the company’s finances.
By comparison, gaming platform Unity Software went public last month at a valuation of $13.7 billion after reporting revenue for the first six months of 2020 of $351 million. Its shares have risen more than 60% since the IPO.
In 2018, KKR acquired a minority stake in AppLovin for $400 million, valuing the company at $2 billion. AppLovin now expects to command a substantially higher valuation, the sources said.
In 2018, AppLovin also began a media division, Lion