Head to Head Analysis: AppLovin (NASDAQ:APP) and Pixelworks (NASDAQ:PXLW)

Pixelworks (NASDAQ:PXLW) and AppLovin (NASDAQ:APP) are both technology companies, but which is the better investment? We will compare the two businesses based on the strength of their valuation, risk, analyst recommendations, profitability, institutional ownership, dividends and earnings.

Analyst Recommendations

This is a summary of current ratings for Pixelworks and AppLovin, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Pixelworks	1	0	2	0	2.33
AppLovin	0	8	13	3	2.79

Pixelworks presently has a consensus target price of $16.00, suggesting a potential upside of 124.09%. AppLovin has a consensus target price of $538.09, suggesting a potential upside of 66.10%. Given Pixelworks’ higher possible upside, analysts clearly believe Pixelworks is more favorable than AppLovin.

Volatility and Risk

Pixelworks has a beta of 1.52, meaning that its share price is 52% more volatile than the S&P 500. Comparatively, AppLovin has a beta of 2.49, meaning that its share price is 149% more volatile than the S&P 500.

Institutional and Insider Ownership

21.4% of Pixelworks shares are owned by institutional investors. Comparatively, 41.8% of AppLovin shares are owned by institutional investors. 4.7% of Pixelworks shares are owned by company insiders. Comparatively, 12.8% of AppLovin shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Earnings and Valuation

This table compares Pixelworks and AppLovin”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Pixelworks	$1.04 million	41.37	-$22.50 million	($1.63)	-4.38
AppLovin	$6.83 billion	15.88	$3.33 billion	$13.01	24.90

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

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Pixelworks	N/A	-28.77%	-14.64%
AppLovin	64.58%	193.10%	59.63%

Summary

AppLovin beats Pixelworks on 13 of the 15 factors compared between the two stocks.

About Pixelworks

Pixelworks, Inc., together with its subsidiaries, develops and markets semiconductor and software solutions for mobile, home and enterprise, and cinema markets in the United States, Japan, China, Taiwan, Korea, and Europe. The company offers imageprocessor integrated circuits, such as embedded microprocessors, digital signal processing technology, and software that control the operations and signal processing within high-end display systems; visual processor integrated circuits that works with a mobile application processor; and transcoder integrated circuits which includes software that control the operations and signal processing for converting multiple bitrates, resolutions and codecs to provide bandwidth efficient video transmissions based on industry standard protocols. It also provides software and platform licensing products comprising Pixelworks Pro Software, a software that enables development and customize the look and feel of mobile products by use of various features, such as absolute color accuracy, HDR tone mapping, SDR-to-HDR conversion, and others; and TrueCut Motion Platform, content creation tool which provides the ability to dial in a motion look on a shot-by-shot basis. The company distributes its products to integrators, branded manufacturers, and branded suppliers. Pixelworks, Inc. was founded in 1997 and is based in Portland, Oregon.

About AppLovin

AppLovin Corporation engages in building a software-based platform for advertisers to enhance the marketing and monetization of their content in the United States and internationally. It operates through two segments, Software Platform and Apps. The company's software solutions include AppDiscovery, a marketing software solution, which matches advertiser demand with publisher supply through auctions; MAX, an in-app bidding software that optimizes the value of a publisher's advertising inventory by running a real-time competitive auction; Adjust, a measurement and analytics marketing platform that provides marketers with the visibility, insights, and tools needed to grow their apps from early stage to maturity; and Wurl, a connected TV platform, which distributes streaming video for content companies and provides advertising and publishing solutions through its AdPool, ContentDiscovery, and Global FAST Pass products. It also offers SparkLabs, which uses app store optimization to enhance ad visibility; AppLovin Exchange, which connects buyers to mobile and CTV devices through a single and direct RTB exchange; and Array, an end-to-end app management suite for mobile operators and end users. In addition, the company operates various free-to-play mobile games. It serves individuals, small and independent businesses, enterprises, advertisers and advertising networks, mobile app publishers, indie studio developers, and internet platforms. AppLovin Corporation was incorporated in 2011 and is headquartered in Palo Alto, California.