Analyzing AppLovin’s Stock Performance and Future Prospects
AppLovin (NASDAQ: APP) remains a prominent topic among investors on Wall Street, and its stock performance has reflected that interest. Over the past two years, AppLovin’s stock has experienced a remarkable rise.
However, with the stock now down nearly 50% from its recent peaks, many investors are left asking: Where is this stock headed next?
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Here’s an overview of AppLovin’s recent performance and future outlook.
Image source: Getty Images.
Performance Recap: A Year in Review for AppLovin
To understand where AppLovin stands, it’s essential to look back at its performance. The stock is up more than 293% over the past 12 months, although a recent decline has triggered concern among investors.
When expanding the view to the last two years, the numbers are even more striking. AppLovin’s stock has experienced a staggering increase of over 1,700%, climbing from about $15 per share to more than $270 per share today.
These sharp increases raise an important question: What factors have contributed to AppLovin’s remarkable stock trajectory?
Driving Trends Behind AppLovin’s Success
The surge in AppLovin’s stock can be attributed to several significant trends. The company’s business model focuses on connecting developers, advertisers, and organizations through programmatic and AI-powered advertising. This sector is rapidly growing as consumers increase their engagement with streaming services, online shopping, and mobile applications.
With this shift in consumer behavior, advertisers are reallocating their budgets from traditional media, such as cable and satellite TV, to more effective platforms. AppLovin’s innovative platform enables advertisers not only to place ads but also to analyze their performance effectively. Consequently, the company’s revenue has surged from $2.8 billion to over $4.7 billion within the past three years.
Looking Ahead: AppLovin’s Future Performance Expectations
Despite its impressive past, investors are keen to know how AppLovin might fare in the future.
According to projections from Yahoo! Finance, analysts anticipate AppLovin will generate $5.7 billion in revenue by 2025, representing a year-over-year growth of 21%. While this figure is respectable, it signals a slowdown from the company’s recent growth rate of around 44%.
Additionally, some short-sellers have alleged that AppLovin’s software may violate app store guidelines by improperly collecting data from platforms such as Reddit, Snap, Meta, and Alphabet‘s Google. Although AppLovin’s CEO has contested these allegations, they pose a risk to investor confidence and may contribute to stock price volatility.
Future Outlook: Assessing AppLovin’s Stock Potential
I remain optimistic about the overarching trends that AppLovin is part of, which include digital advertising, streaming TV, and advancements in AI technology. Yet, it’s important to note that the stock may not be suitable for all investors.
Aside from concerns raised by short-sellers, a key question remains regarding AppLovin’s ability to sustain the high growth rates that Wall Street has come to expect. If the company achieves the projected 21% revenue growth, the stock could still decrease in value, given heightened expectations from investors.
For these reasons, I advise many investors to consider waiting on the sidelines regarding AppLovin’s stock. Long-term investors may find value in monitoring the company’s trajectory as market conditions evolve.
Considering AppLovin? Here’s What Investors Should Know
Investors who can withstand market fluctuations, particularly extreme volatility, might want to evaluate AppLovin’s significance within the expanding digital advertising sector.
Should You Invest $1,000 in AppLovin Right Now?
Before deciding to purchase AppLovin stock, it’s important to note the following:
The Motley Fool Stock Advisor research team has recently highlighted what they consider the 10 best stock picks for investors at this time, and AppLovin did not make the list. The stocks that were included are projected to yield significant returns in the near future.
For context, consider that when Nvidia was featured on this list on April 15, 2005, a $1,000 investment at that point would have grown to a staggering $675,119!*
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Suzanne Frey, an executive at Alphabet, serves on The Motley Fool’s board. Randi Zuckerberg, former director of market development for Facebook and sister of Mark Zuckerberg, also holds a board position with The Motley Fool. Jake Lerch holds positions in Alphabet, Reddit, and Snap. The Motley Fool has stakes in and recommends Alphabet, AppLovin, and Meta Platforms. For more information, refer to The Motley Fool’s disclosure policy.
The views and opinions expressed herein are those of the author and do not necessarily reflect the views of Nasdaq, Inc.
