An analyst has withdrawn his recommendation to buy AppLovin stock. The stock had previously been the top performer in the Nasdaq-100.

Investors should steer clear of shares in AppLovin, the leader in the mobile app advertising market, following its mixed second-quarter financial results, according to Piper Sandler. The investment bank withdrew its “buy” recommendation on the company’s stock and forecast a decline in its price. Until recently, AppLovin was one of the fastest-growing tech companies: in 2024, its stock soared 713%, posting the best performance among all Nasdaq-100 components. In 2025, the stock gained another 108%. In 2026, it is down 50%.

Piper Sandler analyst James Callahan downgraded his rating on shares of advertising software developer AppLovin from “Overweight” to “Neutral,” according to CNBC. Callahan also sharply lowered his price target from $665 to $385. This is 8% below the closing price on August 5.

The analyst note was released on Thursday following AppLovin’s second-quarter earnings report: the company’s third-quarter earnings forecast fell short of market expectations. Against this backdrop, AppLovin’s stock fell 20% on August 6—to its lowest level since May 2025.

“Management attributed the shortfall to the fact that software model improvements were implemented later than expected, but the situation should change in the third quarter. We are concerned about the following: we believe that going forward, in order to meet Wall Street’s expectations, the company may have to implement targeted model improvements more frequently or on a larger scale,” Callahan wrote in a note to clients. “This could also explain, first, the rise in computing costs in the second quarter and, second, investments in the development of new model architectures.”

At the same time, Callahan noted that Piper Sandler continues to rate the management, the company’s business, and its market position; however, the bank now has “more questions than answers regarding whether AppLovin can continue to consistently exceed [market] expectations and raise its forecasts.”

"That's why we prefer to stay out of it," Callahan emphasized.

AppLovin, which provides AI-powered software solutions and tools to improve the effectiveness of mobile app marketing and monetization, reported second-quarter revenue of $1.92 billion. This is 53% more than a year earlier, but the figure was closer to the lower end of the company’s own previous forecast, according to The Wall Street Journal. Wall Street had predicted revenue of $1.94 billion, the publication notes. Earnings per share of $3.76 in the second quarter matched analysts’ expectations, according to FactSet.

At the same time, the WSJ points out that adjusted operating profit before interest, taxes, and depreciation, at $1.614 billion, fell short of even the company’s own forecast range.

AppLovin CEO Adam Foroughi stated that the company has always run its business with the goal of exceeding its own expectations. “This quarter, we were unable to meet that standard,” the WSJ quoted Foroghhi as saying during a conference call to discuss the quarter’s results. “The important thing is that we understand what happened and have already resolved the issue.” According to Foroghhi, the weaker results in the last quarter were due to the timing of software improvements: these were implemented immediately after the end of the quarter, so the rate at which they boosted performance during the reporting period was lower than usual. He emphasized that the company had observed neither a slowdown in demand from advertisers nor any changes in the competitive landscape. Furthermore, he added, the current quarter has gotten off to a strong start.

Nevertheless, the company's third-quarter forecast fell short of Wall Street's expectations. For the current third quarter, AppLovin expects revenue in the range of $2.06 billion to $2.09 billion. Analysts are forecasting $2.08 billion. The company also provided a forecast for adjusted operating profit before interest, taxes, and depreciation in the range of $1.71 billion to $1.74 billion. Analysts had expected an average of $1.76 billion.

Despite Piper Sandler's downgrade, most analysts maintain a positive outlook on AppLovin. According to MarketWatch, 30 of the 36 investment banks tracking the company’s stock recommend buying it, while six more recommend holding it. Wall Street’s average price target is $606.40 per share, which is 45% higher than the closing price on Wednesday, August 5.

This article was AI-translated and verified by a human editor