Quick overview
- AppLovin stock surged +31% to $356.10 following a strong Q3 earnings report that exceeded revenue and EPS expectations.
- The company reported Q3 revenue of $2.18 billion, a 55% year-over-year increase, and guided Q4 revenue above analysts’ forecasts.
- AppLovin also announced a $3.2 billion increase in its buyback authorization, indicating a commitment to returning cash to shareholders.
- Despite the stock’s rise, it experienced a slight decline of -1.7% in after-hours trading.
AppLovin (APP) stock gained 67% this week to close above $390 after its Q3 earnings report. The stock was the worst performer in the S&P 500 this year before the report. The company beat revenue and earnings expectations and guided Q4 revenue above analysts’ expectations. However, still the stock slipped about -1.7% in after-hours trading.
Q3 Earnings Report Results
AppLovin reported Q3 revenue of $2.18 B, up +55% year-over-year, which is above analysts’ expectations of $2.07 B. Revenue also exceeded the high end of the company’s guidance by about $100M. EPS came in at $4.30, which was above analysts’ expectations of $4.03. Meanwhile, net income rose +72% to $1.44 B and adjusted EBITDA margin reached 84%, up from 82% a year ago. This shows that the company is turning growth into profit very efficiently.
At the same time, mobile gaming revenue grew nearly +50% year-over-year, driven by improvements in the advertising models. CEO Adam Foroughi blamed last quarter’s miss on the company itself and said the new models are only partly rolled out.
Q4 Guidance Beat Expectations
AppLovin guided Q4 revenue to $2.37B to $2.40 B, which represents +43% to +44% growth. This is above analysts’ expectations of $2.25B. Adjusted EBITDA margin is expected at 84% to 85%. Now this shows that growth is staying strong into the next quarter, which helped push the stock sharply higher.
$3.2 B Buyback Increase Supports the Stock
AppLovin repurchased 4.1M shares for $1.4B in the quarter and added $3.2B to its buyback authorization. Free cash flow was also $1.4B. This shows that the company is returning a large part of its cash to shareholders, which supports the stock.
AppLovin Rallied While the Market Sold Off
The stock rose while the S&P 500 fell -4.4% in the AI and tech selloff. Meanwhile, Unity also gained about +14%. This shows that investors are favoring ad platforms with measurable returns, which is why AppLovin separated from the weakness in other AI-linked stocks.
Analyst Targets and What to Watch Next
The average Wall Street analyst price target is at $448, which is above the current price, and most analysts rate the stock Buy. RBC raised its price target to $520 from $500 while keeping an Outperform rating.
On the technical levels, $334 is the major and initial support level for now and the next support level sits at $271.75. On the upside, $363.39 is the initial resistance level. Any close above $350 could keep a move toward the initial resistance level. However, any close below $334 could drag the prices towards $271.75.
Meanwhile, investors will be watching the rollout of the new advertising models, growth in the consumer vertical, and margin trends. AppLovin is expected to release its next earnings report in February 2027.
FAQs
Why did AppLovin stock rise 31%?
AppLovin stock gained +31% after the company beat Q3 revenue and EPS expectations and issued Q4 revenue guidance above analysts’ expectations.
What is AppLovin’s Q4 revenue guidance?
AppLovin expects Q4 revenue between $2.37 B and $2.40 B, representing +43% to +44% growth.
Bottom Line:
AppLovin stock gained +31% to close at $356.10 after reporting Q3 revenue of $2.18 B and EPS of $4.30, both above analysts’ expectations. Strong Q4 guidance, an 84% adjusted EBITDA margin, and a $3.2 B increase in buyback authorization supported the rally.
Arslan Ali Butt
Lead Markets Analyst – Multi-Asset (FX, Commodities, Crypto)
Arslan Ali Butt serves as the Lead Commodities and Indices Analyst, bringing a wealth of expertise to the field. With an MBA in Behavioral Finance and active progress towards a Ph.D., Arslan possesses a deep understanding of market dynamics.
His professional journey includes a significant role as a senior analyst at a leading brokerage firm, complementing his extensive experience as a market analyst and day trader. Adept in educating others, Arslan has a commendable track record as an instructor and public speaker.
His incisive analyses, particularly within the realms of cryptocurrency and forex markets, are showcased across esteemed financial publications such as ForexCrunch, InsideBitcoins, and EconomyWatch, solidifying his reputation in the financial community.
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