AppLovin’s Stock Keeps Attracting The Bulls (NASDAQ: APP)

AppLovin's stock price (NASDAQ: APP) has seen an impressive gain through 2024, with more than a 600% uplift since the start of the year. The artificial intelligence (AI) firm operates within the tech industry, and has outperformed the market, and other AI leaders substantially. The APP stock price is indicating a further rise of 2.6% in the pre-market session, as the bulls continue to get behind this one.

The company, which boasts a varied portfolio of gaming apps coupled with an innovative advertising technology (adtech) solution, has emerged as a trailblazer for mobile app developers seeking user attraction and monetisation strategies.

Equally noteworthy was the surge in AppLovin's earnings per share (EPS), skyrocketing from $0.30 to $1.25 year over year. The adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) followed suit, exhibiting a robust 72% increase to $722 million. Riding this wave of financial success, AppLovin has provided guidance for its fourth-quarter revenue to land between $1.24 billion and $1.26 billion, suggestive of a 30% to 32% growth trajectory. This projection aligns seamlessly with the company's long-term revenue growth aspirations, which orbit around a 20% to 30% target range.

In its stellar third-quarter financial update, AppLovin revealed a striking 39% revenue increase, with a total of $1.2 billion earned. The company's software platform was notably a strong growth driver, boasting a 66% revenue spike to $835 million. Its legacy apps division also contributed with a modest but significant 1% uptick in revenue to $369 million. This impressive top-line growth comes alongside an enhancement in the company's profitability metrics, as illustrated by an improved gross margin of 77.5% up from the previous year's 69.3%, even while trimming its sales and marketing expenses by 3%.

A key catalyst for AppLovin's accelerated revenue growth was the introduction of its Axon 2 AI adtech platform in the second quarter of 2023. Axon 2 has been instrumental in driving revenue for the company's gaming customers. Moreover, early results from pilots within the e-commerce sector are heralding promising outcomes, suggesting a broadening of use cases and potential markets for AppLovin's AI-powered solutions.

Investors and tech enthusiasts will keenly watch as AppLovin continues to evolve and potentially redefine success parameters in the AI-driven tech landscape. This is one on many watchlists, but all those hoping to buy on a pullback have not found much opportunity in recent times.