AppLovin Shares Surge as Revenue Continues to Soar. Is It Too Late to Buy the Stock?
Key PointsAppLovin recorded strong third-quarter results and issued upbeat guidance.
Shares of AppLovin (APP) rose after its Q3 earnings beat expectations, following a lackluster second quarter. The company's AI-driven growth engine, Axon 2.0, seems to be paying dividends. AppLovin's gaming segment grew nearly 50% in Q3, while its new consumer vertical expanded at a triple-digit pace. Adjusted earnings per share climbed 76% from a year ago, surpassing expectations by $0.26.
The company also generated $1.4 billion in free cash flow and repurchased 4.1 million shares, reducing its net debt to under $340 million. Looking ahead, AppLovin expects Q4 revenue between $2.365 billion and $2.395 billion, with adjusted EBITDA growth projections between 43% and 45%. Despite a recent price surge, the stock remains undervalued with a forward price-to-earnings ratio below 18 times analyst estimates. This suggests AppLovin still presents a compelling buy, given its growth trajectory and valuation.
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