Why AppLovin stock surged another 30% last month

On By Littum

Shares in mobile app monetization business AppLovin (NASDAQ: APP) rose 29.8% in October, according to data provided by S&P Global Market Intelligence. That’s a big move considering the company didn’t report financial results or make other announcements. Rather, the stock moved higher thanks to Wall Street.

For context, AppLovin had one market value of just $3 billion at the beginning of 2023. It is too small to get much attention from the analyst community. But strong financials sent AppLovin’s stock up 278% in 2023, and it’s up more than 300% so far in 2024. In short, it’s a much bigger company now, and analysts had to start covering it on behalf of their customers.

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In October, many analysts either started covering AppLovin for the first time or changed theirs price target. And in many cases these price targets were revised upwards.

When prominent analysts do this, it gives greater attention and exposure to stocks like AppLovin. As the bullish commentary from Wall Street landed on several radars, AppLovin stock continued its rise in October.

In 2023, AppLovin grew its revenue by nearly 17%, and its profits fluctuated from a loss of $193 million in 2022 to a net income of $357 million in 2023. In the first half of 2024, these trends intensified. Its revenue is up another 46% year-to-date, and it delivered net income of $546 million in the first half.

AppLovin’s high-margin software revenue, powered by artificial intelligence (AI), drives both growth and profits. In short, the company is doing just too well to be ignored any longer. And many analysts believe there is still plenty of room for growth.

AppLovin will report financial results for the third quarter of 2024 after the market closes on November 6. Amid management’s guidance, the company believes it will grow revenue by 30% year over year. It also expects adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) of $630 million to $650 million, which would be a quarterly record.

It should be noted that AppLovin just passed the one-year anniversary of its AI software update that fueled its current growth rate, so it won’t have that catalyst anymore. Management believes it can grow 20% to 30% annually over the long term. But part of this assumes it can diversify away from being primarily used to monetize gaming apps to help monetize apps in other categories and on other platforms, such as connected TV.