AppLovin’s Stock Price Retests $270 After Pre-Market Decline

AppLovin's stock (NASDAQ: APP) looks set to retest the $270 level in the pre-market, with the price pulling back 6.65% overnight after tariffs saw a major stock sell-off. This reverses the trend during the regular trading session where the stock had worked to rally 2.7% into the close, and retesting $300 in the afterhours session.

However, this single-day gain must be viewed within the challenging context of the stock's recent performance. Over the past month, AppLovin shares have fallen 13.92%, with the YTD picture similarly difficult, with the stock down 15%.

This downturn marks a stark contrast to the bullish sentiment surrounding the company earlier in the year, which saw the stock price reach an all-time high of $525.15 on February 12, 2025. While the current price represents a substantial pullback from that peak, the 12 month gain of ~300% highlights the powerful underlying growth narrative that propelled the momentum stock.

From a technical perspective, AppLovin currently presents a mixed signal. The recent downward pressure has likely pushed the stock price below its 50-day moving average, although its substantial gains over the past year mean the stock remains firmly above its 200-day moving average, suggesting the longer-term bullish trend, while tested, may still be intact. This divergence underscores the current battle between short-term selling pressure and the potential for longer-term support.

Fundamentally, AppLovin continues to deliver impressive results. The company significantly outperformed expectations in its fourth-quarter 2024 earnings report, released on February 12, 2025. It posted Earnings Per Share (EPS) of $1.73, handily beating consensus estimates that hovered between $1.12 and $1.34. Revenue also came in strong at $1.37 billion, surpassing the ~$1.26 billion analysts had anticipated, generating a net income of $599.2 million.

The next set of earnings, expected early May points towards an EPS between $1.44 and $1.48 on revenue of approximately $1.38 billion. Notably, this revenue expectation slightly exceeds the high end of AppLovin’s own guidance ($1.355 billion to $1.385 billion), indicating continued high expectations from the Street for its core business performance. The company also guided for Adjusted EBITDA between $855 million and $885 million for Q1.

Recent corporate actions add another dimension to the AppLovin story. In February, the company announced a strategic move to divest its portfolio of mobile apps. This decision aims to sharpen its focus on its high-margin, core software and advertising technology platform, a move largely seen as positive for long-term value creation by allowing concentration on its primary growth engine.

🟩 The Bull Case

• Financial Execution: Demonstrated ability to significantly beat earnings and revenue estimates (Q4 2024 results).
• Dominant Long-Term Growth: share price appreciation over the past year (+300%) reflects momentum.
• Strategic Refocusing: Selling the Apps business allows greater concentration on the core, high-margin advertising software platform.
• Positive Wall Street Outlook: Strong consensus price target suggests significant potential upside.
• Leadership in Mobile AdTech: Operates a leading platform in the lucrative mobile advertising and app monetization market.

🟥 The Bear Case

• Significant Recent Volatility: Sharp pullback from February highs (~-46%) and negative YTD performance (~-15%) signals strong current selling pressure.
• Near-Term Technical Weakness: Trading below the 50-day moving average could indicate potential for further downside.
• Macroeconomic Sensitivity: Performance is linked to the broader digital advertising market, which can be cyclical and sensitive to economic shifts.
• Valuation and Expectations: Meeting or exceeding high analyst estimates and company guidance is crucial to justify its valuation after significant gains.

Despite recent headwinds, analysts, on balance, maintain a positive outlook with a consensus price target of $482.37. There remains a huge disparity in the bull and bear camps here, with the target range particularly wide, from a high of $650 to a low of $105.

Plenty will hinge on how well the company can execute through the coming quarter's, alongside broader market sentiment, and risk appetite. The momentum trades have notably seen a higher pullback than other segments of the market when risk is taken off the table, and the current climate points to more volatility ahead.