AppLovin Stock Tumbled 22% – Opportunity or Trap?
AppLovin (APP) stock has fallen by 22.5% in less than a month, from $733.60 on 22nd Dec, 2025 to $568.76 now. Should you buy this dip?
Dip buying is a viable strategy for quality stocks that have a history of recovering from dips. As it turns out, APP stock passes basic quality checks. But the bad news is that historically, the median return for the 12-month period following sharp dips was -44%, with median peak return of 76%. We define sharp dip as stock going down 30% or more, in less than 30 day period.
Below, we get into details of historical dips and subsequent returns.
Historical Median Returns Post Dips
| Period | Past Median Return |
|---|---|
| 1M | -1.2% |
| 3M | -0.1% |
| 6M | -40.5% |
| 12M | -44.4% |
Historical Dip-Wise Details
APP had 5 events since 1/1/2010 where the dip threshold of -30% within 30 days was triggered
- 76% median peak return within 1 year of dip event
- 104 days is the median time to peak return after a dip event
- -62% median max drawdown within 1 year of dip event
| 30 Day Dip | APP Subsequent Performance | |||||||
|---|---|---|---|---|---|---|---|---|
| Date | APP | SPY | 1Y | Peak Return |
Max Drop |
# Days to Peak |
||
| Median | -44% | 76% | -62% | 104 | ||||
| 3102025 | -34% | -8% | 155% | 208% | -8% | 287 | ||
| 8302022 | -30% | 2% | 76% | 76% | -62% | 365 | ||
| 5052022 | -34% | -7% | -52% | 20% | -75% | 34 | ||
| 1272022 | -32% | -7% | -80% | 26% | -84% | 19 | ||
| 7302021 | -30% | 4% | -44% | 87% | -56% | 104 | ||
AppLovin Passes Basic Financial Quality Checks
Revenue growth, profitability, cash flow, and balance sheet strength need to be evaluated to reduce the risk of a dip being the sign of a deteriorating business situation.
| Quality Metrics | Value | Quality Check |
|---|---|---|
| Revenue Growth (LTM) | 86.4% | Pass |
| Revenue Growth (3-Yr Avg) | 36.0% | Pass |
| Operating Cash Flow Margin (LTM) | 50.6% | Pass |
| Leverage (see below) | – | Pass |
| => Interest Coverage Ratio | 13.1 | |
| => Cash To Interest Expense Ratio | 6.6 |
Not sure if you can take a call on APP stock? Consider portfolio approach
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Individual stocks are unpredictable. A smart portfolio keeps you invested, limits downside shocks, and provides upside exposure
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