AppLovin’s Monster Rally Has Investors Hooked — Now Comes The Hard Part

• The push beyond gaming into e-commerce and self-serve advertising is a key upside driver.
• However, AppLovin remains a smaller player competing against ad-tech giants with deeper data and ecosystem advantages.
• The company also faces other headwinds, including ongoing regulatory scrutiny and heightened expectations.

AppLovin Corp. shares have defied short attacks, withstood controversies and regulatory scrutiny, and yet maintained their verve to finish the year as one of the best-performing S&P 500 companies. 

After hitting a bottom three years back, AppLovin’s stock never turned back. It has been on a turbocharged spree, reaching a record high of $745.61 on Sept. 29, 2025. Although the rally has cooled off since, the stock is on track to end the year more than double its level at the end of 2024. 

The stock was among the most sought-after by hedge funds in the third quarter, said LPL Financial Portfolio Strategist George Smith, following his analysis of the 13F reports filed with the SEC for the quarter.

Source: Koyfin

What made the stock tick? Does the extended rally have further legs?

AppLovin’s Business Model

AppLovin describes itself as a company that enables businesses to advertise profitably. “Our suite of marketing technologies empowers businesses to acquire customers, monetize them, and measure the performance of their advertising efforts.”

Its products include Axon, MaxAdjust and Wurl. 

• AppLovin’s Axon is an artificial intelligence (AI)-driven ad platform designed to help brands grow through automated, performance-driven digital advertising. 
• Max is a solution for in-app ad monetization using in-app bidding.
• Adjust is a mobile measurement partner (MMP) that allows advertisers to track and attribute app installs and in-app events across different marketing channels.
• Wurl is AppLovin’s streaming subsidiary, which it acquired in April 2022 for $430 million in cash and stock. The acquisition helped the company expand its presence in the connected TV (CTV) market. 

AppLovin makes money by charging advertisers a 5% commission on inventory bids and charging them for actual user actions, such as installs and purchases. The company also levies fees on developers to help them market, analyze, and monetize their apps through platforms like AppDiscovery.

Self-Serving Ads — Key Catalyst

The Axon Ads Manager, launched in October, lets advertisers manage campaigns from a self-service dashboard for e-commerce and non-gaming advertisers. Commenting ahead of the launch, Morgan Stanley analyst Matthew Cost said he sees it as a “key catalyst to grow its ad business and prove that it can tap into billions of ad dollars outside the game industry.”

According to eMarketer, the tool positions Axon as an “ROI-first” alternative to Meta’s and Google’s ad ecosystems.

Cost, who modeled $1.75 billion in non-gaming net add revenue for 2026 in October, said he sees multiple pathways to upward revisions, to the extent that customer growth and/or spend per customer exceed Morgan Stanley’s expectations. Given the approximately 90% incremental margins for the ad business, the analyst expects a relatively clean translation to earnings.

AppLovin’s Fundamentals

After downshifting and turning negative for a couple of quarters, AppLovin’s year-over-year (YoY) revenue growth has seen a resurgence this year. Topline grew at an enviable 68% clip in the September quarter. The YoY net income growth was 91.7%, outpacing the revenue growth.

Source: Fiscal.ai

While issuing fourth-quarter guidance in early November, the company guided to roughly 15.7% revenue growth at the midpoint and an adjusted earnings before interest, taxes, depreciation, and amortization margin of 82%-83%.

The elevated valuation, however, is seen as a pushback. The forward price-earnings (P/E) multiple is at a lofty 52.25, compared to the S&P 500’s 22.5 and about 30 for the software industry.

Source: Fiscal.ai

What Retail Traders & Analysts Feel About APP Stock

Reflecting rising retail interest, AppLovin's stock has gained considerable followers on StockTwits this year, with the one-year watcher count change at 120%.

Retail sentiment remained ‘neutral’ as of late Monday, with the mood alternating between ‘bullish’ and ‘neutral’ for much of the year. A bullish watcher said they were “insanely bullish” on AppLovin and that following a strong breakout last week, the momentum is on its side. “Lots to like on this one overall though as it is one of the strongest software names in the mkt along with $PLTR,” they said.

On the other hand, a skeptic felt the stock is overvalued. “250B market cap on 6B sales? What am I missing? Extremely overvalued,” they said.

Wall Street analysts think the AppLovin rally may have run its course, but most have a positive thesis for the stock. According to Koyfin, the average analyst price target for AppLovin is $739.96, implying roughly 6% upside from current levels. Of the 27 analysts covering the stock, 22 have either a ‘Buy’ or a ‘Strong Buy’ rating, three remain on the sidelines, and two have outright sell recommendations. 

AppLovin’s stock saw a few positive analyst actions this month. BTIG, which has a ‘Buy’ rating on AppLovin stock, upped the price target to $771 from $705, The Fly reported. The analyst premised the action on its expectations of healthier gaming acquisition trends in the fourth quarter and beyond. Jefferies and Benchmark also raised their price targets to $860 and $775, from $800 and $700, respectively. Both firms are bullish on AppLovin.

Benchmark analyst Mike Hickey viewed that AppLovin’s prospects have strengthened due to accelerating e-commerce traction, a clear roadmap to scale AXON Ads self-serve, expanding Gen AI creative capabilities, and sustained margin durability. The firm also continued to hold the company in its "Best Ideas” list.

APP Stock —  Buy or Avoid?

Has the stock already fully priced in the fundamentals, or has it run ahead of them? While AppLovin delivers a superior growth profile relative to peers and boasts impressive margins, the durability of this growth remains an open question. This concern is particularly relevant given AppLovin’s position as a David competing against Goliaths such as Google, Meta, and Amazon—platforms with vastly deeper pockets, control over broader advertising ecosystems, and structural data advantages. 

Layered onto this are persistent overhangs, including periodic short-seller attacks and ongoing regulatory scrutiny around whether the company’s data-tracking practices comply with evolving privacy standards. The company should therefore continue to deliver to justify its valuation.

For updates and corrections, email newsroom[at]stocktwits[dot]com.

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