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AppLovin Stock Skyrockets 748% This Year: Too Hot to Touch?
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AppLovin Corporation (APP - Free Report) has been one of the standout performers in 2024, with its stock price surging by a monstrous 748% year to date. This rise is significant compared to the 54% rally of the industry.
Image Source: Zacks Investment Research
APP's performance is notably stronger than those of its competitors in the in-game mobile advertising space. Alphabet Inc. (GOOGL - Free Report) has surged 40% and Meta Platforms (META - Free Report) has gained 79% over the same period.
Now, the key question for investors is whether the stock’s growth trajectory justifies a “buy” at its current level or if waiting for a pullback might offer a better entry point.
APP Shines With Strong Financial Performance
AppLovin’s recent financial results demonstrate the company’s strong fundamentals and growth potential. AXON 2.0 technology and strategic expansion in gaming studios have significantly boosted revenue growth.
The top line rose 39% year over year and 11% sequentially in the third quarter of 2024. Adjusted EBITDA witnessed a 72% year-over-year surge and a 20% sequential increase in the quarter. The net income increased 300% from the year-ago quarter and 40% sequentially. The company reported a 76% year-over-year revenue increase in 2023 and a 41% rise in adjusted EBITDA.
Although there are potential risks, such as the possibility of slowed growth in the in-game advertising segment and the uncertain impact of non-gaming ventures, AppLovin appears well-positioned for continued growth thanks to its technological advancements and strategic expansion efforts.
APP’s Strong Liquidity Ensuring Obligations Are Met
APP’s liquidity position is robust, with a current ratio of 2.41 at the end of the third quarter of 2024 compared to the industry’s 2.16. A current ratio above 1 indicates that the company can comfortably meet its short-term obligations.
Image Source: Zacks Investment Research
APP’s Promising Top and Bottom-Line Prospects
The Zacks Consensus Estimate for APP’s 2024 earnings is pegged at $4.06, indicating 314.3% growth from the year-ago level. Earnings in 2025 are expected to increase by 45.3% from the prior-year actuals. The company’s sales are expected to grow 40% and 21.8% year over year, respectively, in fiscal 2024 and 2025. We anticipate that the enhanced capabilities of AXON 2.0, along with synergies from the software platform and in-app features — such as cross-network advertising, cross-promotion, and the platform’s utilization of in-app user data — will drive revenue growth in the future.
Analysts' Confidence Reflected in Rising Estimates
In the past 60 days, seven estimates for 2024 earnings have been revised upward, with no downward revisions. For 2025, seven estimates moved north over the past 60 days versus no southward revisions. This indicates strong confidence among analysts in the company's ability to improve its financial performance soon.
Image Source: Zacks Investment Research
APP’s “Must Buy” Recommendation
APP presents a compelling investment opportunity due to its impressive financial performance, strong liquidity and robust growth prospects. The company's recent results and strategic initiatives underscore its potential for continued success in the gaming and software sectors. AppLovin’s strong fundamentals, innovative technology, and strategic growth initiatives position it as a leader in its industry. With a solid financial outlook and increasing analyst confidence, we recommend a "Buy" rating for APP stock to capitalize on its promising growth trajectory.
Image: Bigstock
AppLovin Stock Skyrockets 748% This Year: Too Hot to Touch?
AppLovin Corporation (APP - Free Report) has been one of the standout performers in 2024, with its stock price surging by a monstrous 748% year to date. This rise is significant compared to the 54% rally of the industry.
APP's performance is notably stronger than those of its competitors in the in-game mobile advertising space. Alphabet Inc. (GOOGL - Free Report) has surged 40% and Meta Platforms (META - Free Report) has gained 79% over the same period.
Now, the key question for investors is whether the stock’s growth trajectory justifies a “buy” at its current level or if waiting for a pullback might offer a better entry point.
APP Shines With Strong Financial Performance
AppLovin’s recent financial results demonstrate the company’s strong fundamentals and growth potential. AXON 2.0 technology and strategic expansion in gaming studios have significantly boosted revenue growth.
The top line rose 39% year over year and 11% sequentially in the third quarter of 2024. Adjusted EBITDA witnessed a 72% year-over-year surge and a 20% sequential increase in the quarter. The net income increased 300% from the year-ago quarter and 40% sequentially. The company reported a 76% year-over-year revenue increase in 2023 and a 41% rise in adjusted EBITDA.
Although there are potential risks, such as the possibility of slowed growth in the in-game advertising segment and the uncertain impact of non-gaming ventures, AppLovin appears well-positioned for continued growth thanks to its technological advancements and strategic expansion efforts.
APP’s Strong Liquidity Ensuring Obligations Are Met
APP’s liquidity position is robust, with a current ratio of 2.41 at the end of the third quarter of 2024 compared to the industry’s 2.16. A current ratio above 1 indicates that the company can comfortably meet its short-term obligations.
APP’s Promising Top and Bottom-Line Prospects
The Zacks Consensus Estimate for APP’s 2024 earnings is pegged at $4.06, indicating 314.3% growth from the year-ago level. Earnings in 2025 are expected to increase by 45.3% from the prior-year actuals. The company’s sales are expected to grow 40% and 21.8% year over year, respectively, in fiscal 2024 and 2025. We anticipate that the enhanced capabilities of AXON 2.0, along with synergies from the software platform and in-app features — such as cross-network advertising, cross-promotion, and the platform’s utilization of in-app user data — will drive revenue growth in the future.
Analysts' Confidence Reflected in Rising Estimates
In the past 60 days, seven estimates for 2024 earnings have been revised upward, with no downward revisions. For 2025, seven estimates moved north over the past 60 days versus no southward revisions. This indicates strong confidence among analysts in the company's ability to improve its financial performance soon.
APP’s “Must Buy” Recommendation
APP presents a compelling investment opportunity due to its impressive financial performance, strong liquidity and robust growth prospects. The company's recent results and strategic initiatives underscore its potential for continued success in the gaming and software sectors. AppLovin’s strong fundamentals, innovative technology, and strategic growth initiatives position it as a leader in its industry. With a solid financial outlook and increasing analyst confidence, we recommend a "Buy" rating for APP stock to capitalize on its promising growth trajectory.
APP currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.