AppLovin Shares Jump In Premarket Following Stellar Q3, Retail Mood Buoyant

AppLovin Corp. ($APP) shares jumped in premarket trading on Thursday as traders reacted positively to the app marketing platform’s third quarter results.

Palo Alto, California-based AppLovin reported third-quarter earnings per share (EPS) of $1.25, sharply higher than the year-ago’s $0.30 per share. The  bottom-line performance beat the consensus estimate of $0.92.

The company’s revenue grew 39% year-over-year (YoY) to $1.20 billion, exceeding the $1.13-billion consensus estimate. Software platform revenue jumped 66% to $835 million and apps revenue rose a more modest 1% to $363 million. 

AppLovin attributed the strength in software platforms to continued developments of its AXON engine through ongoing self-learning and directed model enhancements. Axon is the company’s artificial intelligence powered ad tech software. This in turn helped its advertising partners to further increase the scale of their spend on its platform. 

Among key user metrics, monthly active payers - defined as unique mobile devices active on one of the company’s apps in a month that completed at least one in-app purchases, fell from 1.8 million in the year-ago quarter to 1.6 million but average revenue per monthly active payer increased from $46 to $52.

For the fourth quarter, the company expects revenue of $1.24 billion to $1.26 billion versus the average analysts’ estimate of $1.19 billion. The company guided adjusted earnings before interest, taxes, depreciation and amortization to $740 million to $760 million, with the corresponding margin at 60%.

As of 6:16 am ET, AppLovin shares climbed 27.63% to $215.12. If the premarket gains hold up, the stock is poised to go past the $200 threshold for the first time ever. So far this year, the stock has gained a whopping 323%.

Following the quarterly results, JPMorgan raised the price target for AppLovin stock from $160 to $200 and maintained a “Neutral” rating. Analysts at the firm pointed out to the e-commerce pilot exceeding management’s expectations. 

Users of the Stocktwits platform were largely positive on the stock. One user sees the new e-commerce product as a game changer.

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