Buy AppLovin Stock Before Its Upcoming Earnings?

AppLovin (NASDAQ:APP), a company that helps mobile app developers publish and market their applications, is set to report its earnings on Wednesday, August 6, 2025.

Demand for Axon 2.0, AppLovin’s proprietary machine learning algorithm for ad delivery, has surged. The software essentially decides which ad to show, to which user, and at what time, to maximize click-through or engagement. While this is similar to what Meta and Google do, Axon is specifically tuned for mobile app advertising. The company’s advertising platform posted strong revenue growth of 71% over Q1 2025, reaching $1.16 billion, and the momentum could continue over Q2. Earnings are estimated to come in at about $2.32 per share for the quarter, per consensus estimates, while revenues are likely to come in at about $1.22 billion, up 13% compared to last year.

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The company has $129 billion in current market capitalization. Revenue over the last twelve months was $5.1 billion, and it was operationally profitable with $2.4 billion in operating profits and net income of $1.9 billion. While a lot will depend on how results stack up against consensus and expectations, understanding historical patterns might just turn the odds in your favor if you are an event-driven trader.

There are two ways to do that: understand the historical odds and position yourself prior to the earnings release, or look at the correlation between immediate and medium-term returns post earnings and position yourself accordingly after the earnings are released. That said, if you seek upside with lower volatility than individual stocks, the Trefis High Quality portfolio presents an alternative – having outperformed the S&P 500 and generated returns exceeding 91% since its inception.

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AppLovin’s Historical Odds Of Positive Post-Earnings Return

Some observations on one-day (1D) post-earnings returns:

• There are 17 earnings data points recorded over the last five years, with 12 positive and 5 negative one-day (1D) returns observed. In summary, positive 1D returns were seen about 71% of the time.
• Notably, this percentage increases to 83% if we consider data for the last 3 years instead of 5.
• Median of the 12 positive returns = 24%, and median of the 5 negative returns = -4.6%

Additional data for observed 5-Day (5D) and 21-Day (21D) returns post earnings are summarized along with the statistics in the table below.

APP Forward Returns 1D, 5D, 21D Returns

Correlation Between 1D, 5D and 21D Historical Returns

A relatively less risky strategy (though not useful if the correlation is low) is to understand the correlation between short-term and medium-term returns post earnings, find a pair that has the highest correlation, and execute the appropriate trade. For example, if 1D and 5D show the highest correlation, a trader can position themselves “long” for the next 5 days if the 1D post-earnings return is positive. Here is some correlation data based on a 5-year and a 3-year (more recent) history. Note that the correlation 1D_5D refers to the correlation between 1D post-earnings returns and subsequent 5D returns.

APP Correlation Between 1D, 5D and 21D Historical Returns

Learn more about Trefis RV strategy that has outperformed its all-cap stocks benchmark (combination of all 3, the S&P 500, S&P mid-cap, and Russell 2000), to produce strong returns for investors. Separately, if you want upside with a smoother ride than an individual stock like AppLovin, consider the High Quality portfolio, which has outperformed the S&P and clocked >91% returns since inception.

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