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The Stock Market Punished AppLovin for Its Best Quarter in Company History


Viewed from behind, a person wearing a dark suit stands with hands clasped over their head, indicating stress or despair. They are in a dark room surrounded by numerous large digital screens displaying complex financial charts, graphs, and stock data in glowing blue and green hues, creating a high-tech, intense trading environment.

Quick Read

  • AppLovin (APP) posted $1.657B in Q4 revenue and $3.24 EPS with 84% EBITDA margins. Shares fell 29.25%.

  • AppLovin generated $4.0B in free cash flow over twelve months while growing revenue at 40%.

  • Analysts maintain Strong Buy ratings on AppLovin with a $705.17 price target representing 75.71% upside.

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AppLovin reported its best quarter in history, with record revenue, 84% EBITDA margins, and $3.24 in earnings per share, yet the stock declined nearly 30%. That kind of disconnect is worth understanding, especially for retail investors. AppLovin (NASDAQ:APP) reported record Q4 earnings on February 10, posting $1.657 billion in revenue against a $1.618 billion estimate and $3.24 in EPS versus $2.97 expected. The company achieved an 84% adjusted EBITDA margin, a profitability level almost unprecedented at this scale, yet shares declined 28.90% over the past month to $404.39. The disconnect between results and reaction has sparked fierce debate on Reddit about whether the selloff represents fear or opportunity.

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Despite AppLovin’s (APP) stock decline following record Q4 2025 results, social sentiment is currently bullish, driven by retail investors seeing a buying opportunity against a bearish Q4 average.

Retail Investors Split on the AI Threat

As it tends to do, social sentiment on Reddit flipped sharply in recent weeks. AppLovin’s sentiment score rose from 30 (bearish) over the quarter to roughly 70 (bullish) this week, indicating that retail traders increasingly view the post-earnings decline as a buying opportunity rather than a fundamental problem. Discussion has centered on r/stocks, where activity remains modest but pointed.

The dominant narrative: AppLovin has gone from overvalued to cheap. One Reddit user laid out the bull case directly. As u/PinPsychological82 wrote: “A company growing revenue at 40% with 84% EBITDA margins and a 25x forward P/E should not be trading down 50% when fundamentals are improving.”

$APP Has Gone from Overvalued to Now Cheap?
by u/PinPsychological82 in stocks

 

The post argues that a company growing revenue by 40%, with 84% EBITDA margins and a 25x forward P/E, should not be trading down 50% when fundamentals are improving. Supporters point to three factors driving optimism:

  • AppLovin dominates mobile gaming ad tech with proprietary AXON 2 models that competitors cannot easily replicate

  • The company generated $4.0 billion in free cash flow over twelve months, far exceeding reported profit

  • AI could actually help AppLovin by making game creation easier, which increases demand for distribution and marketing

But skepticism persists. Some investors worry that Meta or other competitors could erode AppLovin’s auction dominance, or that AI-generated content will disrupt the mobile gaming ecosystem entirely.

Wall Street Sees 75% Upside

All things considered, analysts remain firmly bullish despite the stock decline, with eighteen analysts maintaining a Strong Buy rating and a 12-month price target of $705.17, representing approximately 75% upside from current levels. Zero analysts rate the stock a Sell. The divergence between professional research and market sentiment suggests investors are pricing in AI disruption risk that Wall Street does not yet see as credible. Whether that fear is justified or overdone will likely become clear as AppLovin rolls out its self-service e-commerce platform in the first half of 2026.

 

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