"One year after it soared more than 700%, AppLovin , the adtech stock that began as a mobile gaming company, had another winning year last year as the company sold off its slow-growth games business, leveraged its AI platform, continued to deliver eye-popping growth, and expanded into new verticals like e-commerce, diversifying away from mobile games. The company also successfully rebuffed several short-seller attacks."
"Perhaps, the company's biggest move last year was the sale of its mobile gaming business to Tripledot Studios for $400 million in cash and 20% equity in Tripledot. The move made sense for AppLovin as it makes the company a pure-play adtech stock, gives it a higher growth rate, and makes it easier for investors to analyze the stock and its future potential. Overall, the sale shows that management's focus is squarely on the growing adtech business."
AppLovin transitioned from mobile gaming to pure-play adtech by selling its slow-growth games unit to Tripledot Studios for $400 million cash plus 20% equity. Revenue through the first three quarters rose 72% to $3.82 billion, and GAAP net income increased 128% to $2.23 billion, producing a nearly 60% profit margin. The company leveraged its Axon AI advertising platform to drive growth and expanded into new verticals such as e-commerce and non-gaming sectors. Management successfully defended the business against short-seller attacks. The strategic divestiture simplified the business profile and positioned AppLovin for higher growth and investor clarity.
Read at The Motley Fool
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