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What Happened?
Shares of mobile app advertising platform AppLovin (NASDAQ: APP) jumped 34.2% in the morning session after the company delivered strong fourth quarter 2024 results, exceeding analysts' expectations for revenue, EPS, and EBITDA. Sales surged 44% y/y, driven by a 73% jump in advertising revenue. Profitability improved meaningfully, with adjusted EBITDA soaring 78%. Looking ahead, AppLovin provided bullish EBITDA and sales estimates for the next quarter, well above analyst estimates.
Overall, this was a standout quarter, driven by strength in advertising and expanding margins, with an optimistic outlook for future growth.
The shares closed the day at $471.86, up 24.1% from previous close.
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What The Market Is Telling Us
AppLovin’s shares are extremely volatile and have had 34 moves greater than 5% over the last year. But moves this big are rare even for AppLovin and indicate this news significantly impacted the market’s perception of the business.
The biggest move we wrote about over the last year was 3 months ago when the stock gained 51.7% on the news that the company reported a classic "beat and raise" quarter as efforts to optimize its AI-powered advertising platform seem to be yielding results. AppLovin beat analysts' revenue, EBITDA, and EPS expectations this quarter.
Looking ahead, Q4 guidance was also very encouraging, with revenue and EBITDA guidance coming in ahead and the latter well ahead. In addition, the company reiterated the long-term guidance of sustaining 20-30% annual growth, showing management's strong conviction in the growth strategy. Notably, AppLovin announced plans to diversify beyond the gaming audience by expanding into new verticals such as e-commerce. Zooming out, we think this was a great quarter amid potentially lower expectations given the company's uneven performance in the last few quarters.
AppLovin is up 37.4% since the beginning of the year, and at $469.75 per share, has set a new 52-week high. Investors who bought $1,000 worth of AppLovin’s shares at the IPO in April 2021 would now be looking at an investment worth $7,205.
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