AppLovin Corp (NASDAQ:APP) shares tumbled 16% in early trading Thursday, despite the mobile advertising software company reporting stronger-than-expected fourth-quarter earnings and raising its outlook for 2026.
The company posted revenue of $1.66 billion for Q4, up 66% from a year earlier and slightly above analyst estimates of $1.61 billion.
Adjusted earnings per share came in at $3.24, topping the Street’s $2.96 forecast, while adjusted EBITDA rose 82% to $1.399 billion, translating into a record 84.4% margin.
Net income for the quarter jumped 84% to $1.102 billion, and free cash flow totaled $1.31 billion.
Looking ahead, AppLovin projected first-quarter revenue between $1.745 billion and $1.775 billion, with adjusted EBITDA of $1.465 billion to $1.495 billion, implying a similarly high margin of around 84%. Both figures exceeded consensus expectations.
Wedbush analysts maintained an “Outperform” rating on the stock, raising their 12-month price target to $640 from $465, citing the company’s leading position in mobile gaming advertising, its AI-driven platform, and expansion into e-commerce and connected TV. “AppLovin has repeatedly demonstrated that its phenomenal growth will continue for the foreseeable future, with a staggering profit margin,” Wedbush wrote in a note.
AppLovin said its performance was driven by its Axon 2.0 engine, which converted 95% of incremental revenue into EBITDA, and an early pilot phase in e-commerce. Management emphasized a careful approach to expanding into new verticals, noting that its models require substantial data ingestion to deliver meaningful value.
The stock’s early sell-off comes despite the strong results, as investors may be weighing high valuations and competition in the ad-tech sector.
