AppLovin Stock (APP) May Struggle for More Momentum after 687% Rally

I invested in AppLovin (APP) when the company was worth less than $15 billion. Today, that figure stands at over $113 billion after a 687% rally over 12 months. However, I’m a little concerned that the momentum might be running low simply because the company’s valuation may prove unsustainable unless it can present further catalysts. For now, I’m neutral on this stock, given the evolving interest rate environment, the potential for more risk-off sentiment, and the stock’s valuation.

While I’m now neutral on the stock, I have to note that the company’s rise has been nothing short of remarkable. AppLovin’s ascent in the mobile advertising and gaming industry can be attributed to several key factors. At the heart of its success is the AI-powered Axon engine, which has revolutionized ad targeting and delivery. This innovative technology, which was something of an unknown entity at first, continuously learns and refines data, ensuring ads reach the right audience at the optimal time, significantly boosting user engagement and ad effectiveness.

AppLovin’s strategic focus on the mobile gaming sector, a market projected for substantial growth, has been central to the company’s success. Moreover, AppLovin’s unique combination of gaming development expertise and targeted advertising capabilities gives it a competitive edge over traditional ad platforms.

In turn, its financial performance has impressed the market, with AppLovin reporting a 39% year-over-year revenue increase to $1.2 billion in Q3 2024. Meanwhile, earnings per share more than quadrupled to $1.25, with Q3 earnings beating expectations by an incredible $0.33. Looking forward, the company’s expansion into new verticals, particularly e-commerce, presents significant growth opportunities, as leveraging its AI capabilities in these new sectors could further drive its success.

I’m currently neutral on AppLovin because, despite its impressive profitability and growth prospects, the valuation is hard to justify. The company’s financial metrics paint a picture of a high-performing business with significant potential, yet the current market valuation appears to be pricing in extraordinary future performance.

Starting with the positives, AppLovin presents exceptional profitability metrics, with an EBIT margin of 35.8% and a net income margin of 26.8%, both significantly above the sector median. The company’s revenue growth is equally impressive, with a 41.5% year-over-year increase, far surpassing the sector median of 4.4%. It’s an efficient operator, and the business is growing considerably.

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AppLovin AppLovin APP $19.54 6.13% 2% IBD Stock Analysis Stock finding support at 21-day Possible buy point at Thursday’s 331 high Composite Rating Industry Group Ranking Emerging Pattern Consolidation * Not real-time data. All data shown was captured at 12:03PM EST on 12/20/2024. AppLovin (APP) is the IBD Stock Of The Day as the app

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聯儲局如預期減息25基點,但克利夫蘭聯儲行長提出異議,且點陣圖預示明年只減息兩次。主席鮑威爾強調在進一步減息之前,必須看到抗通脹取得更多進展。特朗普反對權宜支出法案,聯邦政府恐因資金告罄再次陷入停擺。美國最高法院將加急審理TikTok對「不賣就禁」法案的申訴。據悉華府調查中國公司TP-Link。 道瓊斯工業平均指數收跌1123點,跌幅2.59%,報42326點。標普500指數收跌178點,跌幅2.95%,報5872點。納斯達克綜合指數收跌716點,或3.57%,報19392點。 高盛跌4.25%,報550.25美元(下同),是貢獻道指跌幅最大的藍籌,拖低150點,而聯合健康,升2.9%,報499.72元,貢獻道指87點。 科技股方面,蘋果(美:AAPL)收市報248.05元,跌2.14%,谷歌母公司Alphabet(美:GOOGL)收市報188.4元,跌3.59%,亞馬遜(美:AMZN)收市報220.52元,跌4.59%,Facebook母公司Meta(美:META)收市報597.19元,跌3.59%,英偉達(美:NVDA)收市報128.91元,跌1.13%,微軟(美:MSFT)收市報437.39元,跌3.75%,Tesla (美:TSLA)收市報440.13元,跌8.27%。 歐洲STOXX 600指數收漲0.15%,報514點。德國DAX指數收跌0.02%,報20242點;法國CAC 40指數漲0.26%,報7384點;英國富時100指數收漲0.05%,報8199點。 納斯達克中國金龍指數收跌2.41%,報6796點。 美國2年期債息曾升最多2.74%,是11月6日後最大升幅,當日升幅為3.13%。高見4.3609厘,是11月25日4.3625厘後最高。收市報4.3545厘,是11月22日後收市新高,當日報4.373厘。 現報4.3545厘,升2.59%。 美國10年期債息曾升最多2.8%,是11月12日後最大升幅,當日升幅為3.18%。高見4.522厘,是5月31日4.57厘後最高。收市報4.514厘,是5月30日後收市新高,當日報4.546厘。連升8日,累計升0.1173厘,對上一次連升8日是2022年3月16日。連續第8日陽燭,對上一次連續第8日陽燭是2022年3月16日。 美2年期10年期債息差曾高見17.939基點,是11月7日19.07基點後最高。收市報15.314基點,是11月13日後收市最闊,當日報16.126基點。連續兩日擴闊,累計0.962基點,對上一次連升2日是12月9日。 美3個月10年期債息差曾高見17.395基點,是2022年10月24日28.043基點後最闊。收市報16.596基點,是2022年10月24日後收市新高,當日報22.517基點。 金龍指數曾跌最多2.76%,是12月10日後最大跌幅,當日跌幅為4.51%。低見6772.25點,是12月5日6762.2點後最低。收市報6796.68點,是12月5日後收市新低,當日報6775.42點。第1日陰燭。 道指曾跌最多2.65%,是8月5日後最大跌幅,當日跌幅為3.12%。低見42300.04點,是11月5日41766.96點後最低。收市報42326.87點,是11月5日後收市新低,當日報42221.88點。連跌10日,累計跌2687.17點,對上一次連跌10日是1974年10月3日。連續第10日陰燭,對上一次連續第10日陰燭是2021年6月18日。 標指曾跌最多3.02%,是8月5日後最大跌幅,當日跌幅為4.25%。低見5867.79點,是11月20日5860.56點後最低。收市報5872.16點,是11月15日後收市新低,當日報5870.62點。連跌2日,累計跌201.92點,對上一次連跌2日是12月13日。連續第2日陰燭,對上一次連續第2日陰燭是12月13日。 納指曾跌最多3.84%,是8月5日後最大跌幅,當日跌幅為6.36%。低見19336.59點,是12月2日19255.43點後最低。收市報19392.69點,是11月29日後收市新低,當日報19218.17點。連跌2日,累計跌781.2點,對上一次連跌2日是12月10日。第1日陰燭。   其他報道 聯儲局減息25基點 明年只減兩次 鮑威爾言論偏鷹 道指挫1123點 50年最長跌浪 北水增持工行 減持盈富 Source link

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This article is an on-site version of our Unhedged newsletter. Premium subscribers can sign up here to get the newsletter delivered every weekday. Standard subscribers can upgrade to Premium here, or explore all FT newsletters Good morning. Thank you to everyone for sharing your car horror stories — it was an education for Aiden especially,

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