Digital Turbine (NASDAQ:APPS) Shares Gap Down - Here's What Happened

Key Points

• Digital Turbine shares plunged: The stock opened at $8.29 versus its prior $11.30 close and was reported down 35.4%, despite strong quarterly results.
• Results and revenue outlook beat expectations: Fiscal Q2 revenue rose 27% to $178.7 million and adjusted EPS was $0.18; the company raised FY2027 revenue guidance to $670 million–$690 million.
• Profit concerns weighed on investors: Higher partner payouts pressured margins, while management held its adjusted EBITDA forecast at $145 million–$155 million and plans AI investment, raising near-term profitability concerns.

Digital Turbine, Inc. (NASDAQ:APPS - Get Free Report)'s share price gapped down before the market opened on Tuesday. The stock had previously closed at $11.30, but opened at $8.29. Digital Turbine shares last traded at $7.3210, with a volume of 5,649,690 shares traded.

Digital Turbine News Summary

Here are the key news stories impacting Digital Turbine this week:

• Positive Sentiment: Fiscal Q2 revenue rose 27% year over year to $178.7 million, beating estimates, while adjusted EPS of $0.18 also topped expectations. Adjusted EBITDA increased 46% to $39.8 million. Digital Turbine reports fiscal 2027 second-quarter results
• Positive Sentiment: The company raised its FY2027 revenue outlook to $670 million–$690 million, above the roughly $665 million analyst consensus, citing momentum in its App Growth Platform. Digital Turbine FY2027 guidance
• Neutral Sentiment: Management pointed to AI-driven declines in open-web traffic as a potential shift of advertising toward apps, while also investing in AI. CEO comments on AI and advertising
• Negative Sentiment: Investors were concerned that higher partner payouts squeezed margins and that the company kept its FY2027 adjusted EBITDA forecast at $145 million–$155 million despite raising revenue guidance. Planned AI spending adds to near-term profit concerns. Digital Turbine earnings and AI investments

Analyst Upgrades and Downgrades

A number of analysts have weighed in on the company. Weiss Ratings reiterated a "sell (e+)" rating on shares of Digital Turbine in a research report on Wednesday, September 2nd. Zacks Research cut Digital Turbine from a "strong-buy" rating to a "hold" rating in a report on Monday, July 27th. Roth Capital started coverage on shares of Digital Turbine in a research note on Thursday, October 15th. They issued a "buy" rating and a $19.00 target price on the stock. Northland Securities began coverage on shares of Digital Turbine in a research note on Thursday, October 29th. They issued an "outperform" rating and a $17.00 target price on the stock. Finally, TD Cowen reaffirmed a "hold" rating on shares of Digital Turbine in a report on Tuesday, September 29th. Six investment analysts have rated the stock with a Buy rating, two have assigned a Hold rating and one has assigned a Sell rating to the company's stock. According to MarketBeat, the stock currently has a consensus rating of "Moderate Buy" and a consensus target price of $15.42.

Digital Turbine Stock Down 35.4%

The business's 50 day moving average price is $10.59 and its 200-day moving average price is $7.68. The company has a debt-to-equity ratio of 1.80, a current ratio of 1.20 and a quick ratio of 1.20. The company has a market cap of $883.08 million, a P/E ratio of -27.88, a PEG ratio of 0.49 and a beta of 3.01.

Digital Turbine (NASDAQ:APPS - Get Free Report) last released its quarterly earnings results on Monday, November 9th. The software maker reported $0.18 EPS for the quarter, topping analysts' consensus estimates of $0.17 by $0.01. Digital Turbine had a positive return on equity of 38.34% and a negative net margin of 4.46%. The business had revenue of $178.68 million for the quarter, compared to analyst estimates of $166.75 million. On average, analysts anticipate that Digital Turbine, Inc. will post 0.63 earnings per share for the current fiscal year.

Institutional Trading of Digital Turbine

Several large investors have recently made changes to their positions in the business. Granahan Investment Management LLC raised its holdings in shares of Digital Turbine by 12.0% in the first quarter. Granahan Investment Management LLC now owns 7,112,351 shares of the software maker's stock valued at $20,484,000 after buying an additional 762,888 shares during the last quarter. Bank of America Corp DE grew its holdings in Digital Turbine by 17.4% during the 1st quarter. Bank of America Corp DE now owns 3,619,171 shares of the software maker's stock worth $10,423,000 after acquiring an additional 535,169 shares during the last quarter. Dimensional Fund Advisors LP grew its holdings in Digital Turbine by 56.1% during the 1st quarter. Dimensional Fund Advisors LP now owns 2,353,594 shares of the software maker's stock worth $6,778,000 after acquiring an additional 846,116 shares during the last quarter. Bank of New York Mellon Corp acquired a new stake in Digital Turbine in the 2nd quarter valued at about $5,374,000. Finally, Globeflex Capital L P acquired a new stake in Digital Turbine in the 2nd quarter valued at about $4,745,000. Institutional investors own 63.66% of the company's stock.

About Digital Turbine

Digital Turbine, Inc provides mobile technology and advertising solutions that connect app developers and advertisers with consumers through smartphones and other connected devices. Its platform supports app discovery, user acquisition, and advertising across the mobile ecosystem.

The company's services include on-device app recommendations and installation tools, as well as advertising solutions for app publishers and brands. Digital Turbine works with mobile operators and device manufacturers to deliver these services to users.

Digital Turbine expanded its mobile advertising capabilities through acquisitions, including AdColony and Fyber in 2021.

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