AppLovin (NASDAQ:APP) Shares Down 3.5% - Here's What Happened

Key Points

• AppLovin shares fell 3.5% in Tuesday midday trading, from a prior close of $410 to $395.51; trading volume was about 4% below its average.
• The company’s latest quarter was stronger than expected: revenue rose 55.5% year over year to $2.18 billion and EPS of $4.30 beat the $4.03 consensus. Its fourth-quarter outlook was also reported as above expectations.
• Despite the results, investor risks include elevated expectations and a securities class-action complaint alleging misleading statements about AI tools and model improvements; the allegations have not been established. Analysts’ average rating is “Moderate Buy,” with an average price target of $497.93.

AppLovin Corporation (NASDAQ:APP - Get Free Report)'s stock price was down 3.5% during mid-day trading on Tuesday. The stock traded as low as $383.31 and last traded at $395.51. 5,430,173 shares were traded during mid-day trading, a decline of 4% from the average session volume of 5,629,000 shares. The stock had previously closed at $410.00.

Trending Headlines about AppLovin

Here are the key news stories impacting AppLovin this week:

• Positive Sentiment: AppLovin reported third-quarter revenue of $2.18 billion, up 55.5% year over year, and earnings per share of $4.30, ahead of analyst expectations. Its fourth-quarter outlook was also described as stronger than consensus; e-commerce advertiser spending grew at a triple-digit rate. Article: AppLovin: 3 Key Takeaways for Long-Term Investors
• Positive Sentiment: An analyst commentary upgraded APP to Buy, citing reaccelerating growth, model-driven advertiser spending, and room for both AppLovin and Unity to expand. Article: AppLovin Vs. Unity: Room For Two, But I Prefer Unity
• Neutral Sentiment: After a reported 51% surge following its earnings release, coverage notes that elevated expectations and execution risks could limit further gains, despite the improved results and outlook. Article: APP Stock Surges 51% After Q3 Earnings: Is it Still a Buy?
• Negative Sentiment: Several law firms are publicizing a securities class action with a November 16 lead-plaintiff deadline. The complaint alleges AppLovin overstated the consistency of AI model improvements and the readiness or adoption of AI advertising tools; one notice also alleges executives sold more than $109.1 million in shares. These are allegations, not established findings, but the litigation could add uncertainty. Article: APP Shareholder Alert

Analyst Upgrades and Downgrades

A number of research firms recently commented on APP. Jefferies Financial Group dropped their price objective on AppLovin from $550.00 to $375.00 and set a "buy" rating for the company in a report on Thursday, October 8th. Morgan Stanley decreased their target price on AppLovin from $450.00 to $400.00 and set an "overweight" rating for the company in a research report on Tuesday, October 13th. Phillip Securities raised AppLovin from a "moderate buy" rating to a "strong-buy" rating and lowered their price target for the company from $635.00 to $610.00 in a research note on Tuesday, August 11th. Daiwa Securities Group lowered their price target on AppLovin from $569.00 to $345.00 and set an "outperform" rating for the company in a research note on Wednesday, August 19th. Finally, Benchmark cut their price target on shares of AppLovin from $500.00 to $440.00 and set a "buy" rating on the stock in a research report on Monday, August 17th. Three research analysts have rated the stock with a Strong Buy rating, seventeen have assigned a Buy rating and eight have issued a Hold rating to the stock. According to data from MarketBeat.com, AppLovin currently has an average rating of "Moderate Buy" and an average price target of $497.93.

AppLovin Trading Down 3.5%

The company has a fifty day simple moving average of $295.20 and a two-hundred day simple moving average of $409.29. The company has a quick ratio of 4.30, a current ratio of 4.30 and a debt-to-equity ratio of 1.11. The stock has a market capitalization of $132.36 billion, a P/E ratio of 26.62, a price-to-earnings-growth ratio of 0.60 and a beta of 2.51.

AppLovin (NASDAQ:APP - Get Free Report) last released its quarterly earnings results on Wednesday, November 4th. The company reported $4.30 EPS for the quarter, topping analysts' consensus estimates of $4.03 by $0.27. AppLovin had a return on equity of 196.31% and a net margin of 65.89%. The company had revenue of $2.18 billion for the quarter, compared to analyst estimates of $2.07 billion. During the same quarter last year, the firm posted $2.45 earnings per share. AppLovin's revenue was up 55.5% compared to the same quarter last year. On average, sell-side analysts expect that AppLovin Corporation will post 16.18 earnings per share for the current year.

Institutional Investors Weigh In On AppLovin

Several large investors have recently made changes to their positions in the stock. State Street Corp boosted its stake in AppLovin by 28.3% in the 2nd quarter. State Street Corp now owns 15,095,667 shares of the company's stock worth $7,777,741,000 after purchasing an additional 3,328,338 shares during the period. WCM Investment Management LLC grew its holdings in shares of AppLovin by 5.2% during the first quarter. WCM Investment Management LLC now owns 5,001,600 shares of the company's stock worth $1,860,995,000 after buying an additional 245,290 shares in the last quarter. UBS AM a distinct business unit of UBS ASSET MANAGEMENT AMERICAS LLC raised its position in AppLovin by 7.5% in the 2nd quarter. UBS AM a distinct business unit of UBS ASSET MANAGEMENT AMERICAS LLC now owns 1,735,471 shares of the company's stock valued at $894,167,000 after buying an additional 121,605 shares during the last quarter. Bank of New York Mellon Corp acquired a new stake in AppLovin in the 2nd quarter valued at $730,015,000. Finally, Amundi grew its holdings in shares of AppLovin by 19.5% in the 2nd quarter. Amundi now owns 1,332,633 shares of the company's stock valued at $686,612,000 after acquiring an additional 217,214 shares in the last quarter. Institutional investors own 41.85% of the company's stock.

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.

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