Critical Comparison: Pixelworks (NASDAQ:PXLW) & AppLovin (NASDAQ:APP)

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

Analyst Ratings

This is a summary of current recommendations for AppLovin and Pixelworks, as provided by MarketBeat.

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

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

Valuation and Earnings

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

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

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.

Insider and Institutional Ownership

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

Risk and Volatility

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

Profitability

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

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

Summary

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

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.

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.