AppLovin Stock Surges on Upbeat Forecast, Expanded Stock Buyback—Key Level to Watch

AppLovin Corporation

AppLovin Corporation (APP) topped quarterly earnings and sales estimates, issued an outlook that sailed past Wall Street expectations and upped its stock buyback program, sending its shares sharply higher in pre-market trading Thursday morning.

The company, which enables app developers to market, monetize and analyze their apps, late Wednesday reported fourth-quarter adjusted earnings of 49 cents per share on revenue of $953 million. Analysts had expected earnings of 35 cents a share on sales of $929 million.

AppLovin attributed the better-than-expected quarterly results to a strong holiday season, growth in the mobile app advertising market, and bidding enhancements to its platform. In particular, the company’s software platform segment performed strongly in the period, generating $576 million in revenue, representing year-over-year growth of 88% and sequential growth of 14%, driven by its AI-enhanced AppDiscovery user acquisition solution.

Looking at the first quarter, the company projects adjusted earnings to range between $475 million and $495 million, significantly above the Street forecast of $440 million. Its top line guidance of $955 million to $975 also easily surpasses the consensus view, which analysts had pegged at $912 million.

AppLovin on Wednesday also announced an expansion of its stock buyback program by $1.25 billion. “We remain focused on delivering long-term shareholder value through a combination of share management and free cash flow generation,” the company’s fourth quarter 2023 shareholder letter said. In 2023, AppLovin repurchased 54.3 million shares of its Class A common stock.

Since breaking out from a five-month channel in January, the APP share price has struggled to make meaningful gains above the pattern. However, trading volumes have increased in the lead-up to earnings, indicating accumulation of the stock. If the price continues to trend high post earnings, keep an eye on the $76 level—an area on the chart where the stock may run into overhead resistance from a countertrend peak that formed in mid-February 2022.

AppLovin shares were up 23% at $57.80 about two-and-a-half hours before the opening bell.

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As of the date this article was written, the author does not own any of the above securities.