AppLovin stock collapsed after a strong report. What didn't it convince Wall Street of?
Since the beginning of 2026, the previously popular ad platform with investors has lost about a third of its value
Applovin's shares look expensive despite a stock price crash in 2026, claims The Motley Fool / Photo: Shutterstock.com
AppLovin, a mobile app monetization platform, fell after its quarterly financial report, even though its results beat expectations and its revenue guidance was raised. The stock, which Deutsche Bank recently called "best-in-class," has lost a third of its value since the start of 2026.
Details
The advertising platform's fourth-quarter 2025 earnings soared 84% year-over-year to $3.24 per share. Quarterly revenue jumped 66% to $1.66 billion, both above consensus forecasts of $2.95 billion and $1.6 billion, respectively. AppLovin's own revenue guidance for the current quarter also beat Wall Street's expectations. In addition, the company predicted to maintain high profitability, Barron's writes.
AppLovin shares fell 6% on the Nasdaq after the report was published. In the course of trading, the drawdown reached 9%. On the OTC market in the U.S., the company's shares are also trading down by 6%.
Why stocks fell
The fact that AppLovin beat analysts' expectations wasn't enough to quell investor concerns about the company's inflated valuation, states The Motley Fool. "Investors believe the stock has gotten ahead of itself, and the Q1 2026 outlook does not justify the current quote level. The stock trades at a 45.9 multiple to operating cash flow - a significant premium to the five-year average of 19.7," the publication noted.
Context
In the third quarter of 2025, shares of AppLovin, which makes money by placing ads in mobile games, were the top gainers in the S&P 500 index. However, the ad platform has recently come under pressure from a number of negative factors, from an SEC investigation to the threat of AI-based tools to video game developers' business models. January's report by short-seller CapitalWatch, which included high-profile allegations of ties to international crime, was also fueling the fire, but had to be retracted after a denial from AppLovin.
Since the beginning of 2026, AppLovin's stock price has collapsed 32%. CEO Adam Foroughi remains optimistic, saying that market sentiment doesn't match AppLovin's "business realities." "If the market chooses to value our stock based on fear while we continue to grow revenue, cash flow and product capabilities, we will remain focused on executing our strategy and let our results speak for themselves," Barron's quoted him as saying at a Feb. 11 confab.
This article was AI-translated and verified by a human editor
