AppLovin Plunges 18% Despite Blowout Earnings as AI Fears Rule

"Despite the stellar results, shares are plunging 18% in morning trading today, to around $371 per share, driven by investor fears that artificial intelligence's (AI) advancements could erode its ad tech dominance. Coupled with some analysts cutting their price targets - even though the new levels remain well above where AppLovin currently trades - and it's right to wonder just how far the stock can fall."

"AppLovin's Q4 revenue growth was fueled by enhancements to its core mobile gaming ad platform, seasonal demand, and expansion into e-commerce advertising. The top line surged 66% year-over-year to $1.66 billion, exceeding analyst estimates of $1.61 billion. Net income also climbed 84% to $1.10 billion, while adjusted EBITDA hit $1.4 billion with an 84% margin. The company issued Q1 2026 guidance for revenue of $1.745 billion to $1.775 billion and adjusted EBITDA of $1.465 billion to $1.495 billion, both above consensus estimates."

"Free cash flow reached $1.31 billion, an 88% increase, bolstering a $2.5 billion cash position. For the full year 2025, revenue totaled $5.48 billion, up 70%, with net income at $3.33 billion, more than doubling from 2024. Share repurchases continued, with 0.8 million shares bought back in Q4 for a yearly total of 6.4 million at $2.58 billion. It reported a Rule of 40 score of 150, far exceeding the 40% benchmark for SaaS companies."

Q4 revenue rose 66% year-over-year to $1.66 billion, beating estimates, while net income increased 84% to $1.10 billion and adjusted EBITDA reached $1.4 billion at an 84% margin. Q1 2026 guidance calls for $1.745–1.775 billion in revenue and $1.465–1.495 billion of adjusted EBITDA, both above consensus. The apps segment, including MAX mediation, drove margin expansion and strong flow-through. Free cash flow was $1.31 billion and cash totaled $2.5 billion. Full-year 2025 revenue was $5.48 billion with net income of $3.33 billion. Shares fell about 18% on investor concerns that AI could erode ad-tech leadership.

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