Why Is AppLovin Stock Trading Near Its Low While Revenue Keeps Growing?

AppLovin (APP) stock has lost about 55% since mid-December 2025, falling to $305 by September 9, 2026, while the S&P 500 gained 12.5%. The business did not shrink: second-quarter revenue grew 53% year over year. A single report cannot account for a nine-month slide, but the August one shows why growth that fast is hard to price. It arrives in steps the company cannot schedule.

AppLovin’s Second Quarter Fell Short Of Its Own Standard As Its Models Improved More Slowly

Gaming still earns most of AppLovin’s revenue, and model performance is the biggest driver of its growth. Better models let advertisers spend more at their return targets, so budgets rise. In the second quarter those gains came more slowly than normal, and the next step up landed just after the quarter ended.

Revenue of $1.92 billion landed just below the midpoint of guidance, and adjusted EBITDA slipped just under its range as the company spent more on compute to train models. The CEO saw no sign of weaker advertiser demand and called model gains research, with no guaranteed lift in any three-month stretch.

AppLovin’s other engine is its consumer business, built around e-commerce advertisers.

And AppLovin’s Consumer Business Is Still Too Small To Fully Cover A Slow Quarter

Advertiser spend in that business set another record in the second quarter, 28% above fourth-quarter 2025 levels, normally those advertisers’ seasonal peak. Management concedes the consumer business is not yet large enough to fully smooth a slow quarter.

The company opened AppLovin Ads Manager to the public and is courting mid-market advertisers first, partly through partnerships. The CEO calls the ad itself the biggest hurdle: AppLovin cannot yet hand an advertiser a high-quality video of 30 to 60 seconds out of the box. He says mid-market advertisers probably already have suitable creative, but small sellers signing up directly probably do not.

So Your Money Is Riding On Upgrades AppLovin Cannot Schedule

Management says the next upgrade is live and, heading into a seasonally stronger part of the year, growth is picking up again. Its third-quarter guide calls for revenue 7% to 8% above the second quarter, assuming no further model releases. Against a year earlier, that means growth of 46% to 48%, below the second quarter’s 53%. The sequential figure measures a rebound from a light quarter, the year-over-year figure a slowing pace.

Even after the fall, you are paying for a lot of growth. AppLovin’s market value of about $102 billion is roughly 15 times its $6.83 billion of trailing twelve-month revenue. That multiple leans on material lifts the CEO says will not come in every period.

In August, the company said the SEC had closed its inquiry, a voluntary request AppLovin never deemed material, with no recommended action. Yet the shares still trade only a few dollars above their 52-week low. If you hold AppLovin, the test is whether the upgrade already live delivers that guided step up.

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