AppLovin Stock Can Sink, Here Is How
AppLovin (APP) has stumbled before. Its stock has plunged more than 30% within a span of less than 2 months on 3 occasions in recent years, wiping out billions in market value, and erasing massive gains in a single correction. If history is any guide, APP stock isn’t immune to sudden, sharp declines.
Specifically, we see these risks:
- Regulatory Blowback & Platform De-platforming Risk
- Unsustainable Growth Fueled by Aggressive, Potentially Illicit Tactics
- Deteriorating Financial Health & Insider Abandonment
Risk 1: Regulatory Blowback & Platform De-platforming Risk
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- Details: Material reduction in revenue and earnings., Sharp contraction in valuation multiple to low double-digits.,
- Segment Affected: Software Platform
- Potential Timeline: Next 2-4 Quarters
- Evidence: Securities class-action lawsuit alleging ‘backdoor installation scheme’ and data misuse., Short-seller reports from Fuzzy Panda, Culper, and Muddy Waters detailing alleged violations of Apple and Google’s app store policies.,
Risk 2: Unsustainable Growth Fueled by Aggressive, Potentially Illicit Tactics
- Details: Deceleration in user and revenue growth., Loss of advertiser trust and spend.,
- Segment Affected: Software Platform
- Potential Timeline: Immediate to Next 2 Quarters
- Evidence: Allegations of reverse-engineering Meta’s advertising data., Accusations of using ‘Persistent Identity Graphs’ (PIGs) against terms of service.,
Risk 3: Deteriorating Financial Health & Insider Abandonment
- Details: Negative revisions to earnings estimates., Further stock price decline due to loss of confidence.,
- Segment Affected: Corporate
- Potential Timeline: Immediate
- Evidence: Significant increase in accounts receivable in Q3 2025, suggesting potential channel stuffing or slowing collections., Cluster selling by top executives in late 2025, including Chief Administrative & Legal Officer.,
What Is The Worst That Could Happen?
Looking at risk for APP, it’s clear even with good fundamentals, big drops happen. During the 2022 inflation shock, APP fell about 92%. That’s a steep hit. Past crises show how vulnerable it can be, so keep in mind significant downturns are possible despite the positives.
But the Stocks fall even when markets are good – think events like earnings, business updates, and outlook changes. Read APP Dip Buyer Analyses to see how the stock has recovered from sharp dips in the past.
Is Risk Showing Up In Financials Yet?
- Revenue Growth: 86.4% LTM and 36.0% last 3-year average.
- Cash Generation: Nearly 50.6% free cash flow margin and 52.5% operating margin LTM.
- Valuation: AppLovin stock trades at a P/E multiple of 73.9
| APP | S&P Median | |
|---|---|---|
| Sector | Information Technology | – |
| Industry | Application Software | – |
| PE Ratio | 73.9 | 23.7 |
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| LTM* Revenue Growth | 86.4% | 6.2% |
| 3Y Average Annual Revenue Growth | 36.0% | 5.7% |
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| LTM* Operating Margin | 52.5% | 18.8% |
| 3Y Average Operating Margin | 35.7% | 18.4% |
| LTM* Free Cash Flow Margin | 50.6% | 13.5% |
*LTM: Last Twelve Months
If you want more details, read Buy or Sell APP Stock.
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