Last month witnessed a significant surge of approximately 30% in AppLovin's share price.
The shares of mobile-app monetization firm AppLovin (decrease of 0.53% in APP) skyrocketed by 29.8% in October, as per data from S&P Global Market Intelligence. Surprisingly, the company didn't release financial results or make any announcements during this period. But the stock kept surging, majorly due to Wall Street's influence.
Previously, AppLovin had a market value of mere $3 billion in early 2023, making it unremarkable for analysts. However, back-to-back strong financial performances turned AppLovin's fortunes around. In 2023, the stock climbed 278%, while it had already risen over 300% in 2024. This transformed AppLovin into a noteworthy company in the analyst community's eyes.
In October, numerous analysts either initiated coverage of AppLovin or revised their estimated prices. In many cases, these new targets saw a significant increase.
When influential analysts take such actions, they often bring more attention and recognition to stocks like AppLovin. Once the positive analysis from Wall Street started spreading to more audiences, AppLovin's stock continued its upward trend in October.
What draws Wall Street to AppLovin?
AppLovin managed to increase its revenue by approximately 17% in 2023. Moreover, it transitioned from logging a $193 million loss in 2022 to racking up $357 million in net income in 2023. In the first half of 2024, both revenue and net income surged further, reflecting a 46% revenue growth and $546 million in net income.
AppLovin's high-margin software revenue, thanks to machine learning (AI), fueled this impressive growth and profitability. To reiterate, the company's operations are currently ticking all the right boxes. Analysts believe that it still has room to expand.
What's in store for AppLovin?
AppLovin is scheduled to reveal its third-quarter 2024 results after market close on November 6. As per management's projections, the company anticipates a 30% year-over-year revenue surge. Moreover, it expects EBITDA of $630 million to $650 million for this quarter, breaking its previous record.
Interestingly, AppLovin has recently celebrated the one-year anniversary of its AI software update which has been instrumental in accelerating its growth. However, this boost might not be a long-term factor anymore as management projects an annual growth rate of 20% to 30%. This growth, according to them, would depend upon diversifying beyond being primarily a gaming app monetization tool to helping apps in various other categories and platforms, such as connected TV.
I am expecting the Q3 figures to impress and the fourth-quarter guidance to be strong as well. However, keenly observe any updates regarding expanding its scope beyond its core gaming category to understand its long-term growth potential.
Despite not releasing any financial results or announcements, the surge in AppLovin's stock in October could be attributed to the increased interest and estimated price targets from analysts. The financial performance of AppLovin, including its significant revenue growth and transition from loss to profitability, has been attracting Wall Street's attention.
As AppLovin's third-quarter 2024 results approach, investors will be keeping an eye on the company's projected 30% revenue surge and EBITDA of $630 million to $650 million, which could further boost its market value. The company's plan to diversify beyond gaming apps to help apps in various other categories and platforms like connected TV is also a promising indicator of its long-term growth potential.
In terms of finance and investing, this could be an opportunity for investors to consider adding AppLovin to their portfolios, considering its impressive performance and growth prospects.
