To The Moon

$AppLovin Corporation(APP)$ is scheduled to report its four-quarter 2024 on 12 Feb after market close.

APP share price has rallied a massive 466.5% in the past six months, and according to data compiled by Bloomberg, analysts project around $1.263 billion in Q4 revenue and $1.25 in adjusted EPS, reflecting a 32% and 155% YoY increase, respectively.

AppLovin (APP) Last Positive Earnings Call Result In More Than 128% Change

Since the last positive earnings call from APP on 06 Nov 2024, it has given investors 128.06% change, the earnings call conveyed a strong positive sentiment with significant revenue and earnings growth, successful advancements in technology, and promising results from the e-commerce pilot.

Although there were slight concerns about future flow-through reductions and limited growth in the Apps segment, these were outweighed by the overall positive performance and strategic initiatives.

AppLovin (APP) Guidance To Focus On Strong Revenue Boost

During the Q3 2024 earnings call for AppLovin, the company provided financial guidance that highlighted expected revenue between $1.24 billion and $1.26 billion for the fourth quarter, with adjusted EBITDA projected to range from $740 million to $760 million, aiming for an adjusted EBITDA margin of 60%.

The company reported a strong Q3 performance with total revenue reaching $1.2 billion and adjusted EBITDA of $722 million, marking a 39% increase in revenue and a 72% increase in adjusted EBITDA year-over-year. AppLovin's free cash flow for the quarter was $545 million, demonstrating a 182% increase from the previous year.

Additionally, the company announced a significant increase in its share repurchase authorization by $2 billion, bringing the total remaining authorization to $2.3 billion. Looking ahead, AppLovin anticipates continued strong growth, driven both by advancements in its AXON algorithm and promising early results from its e-commerce pilot, expecting this new vertical to scale significantly in 2025.

We could be seeing a strong revenue from its mobile advertising as seen from its competitors $Alphabet(GOOGL)$ , this segment is set to grow.

AppLovin (APP) Strong Free Cash Flow And Revenue Boost From Mobile Advertising

In the third quarter, we saw APP posted record revenue and earnings growth as the total revenue reached $1.2 billion with adjusted EBITDA of $722 million, marking a 39% increase in revenue and a 72% increase in adjusted EBITDA from the same period last year. We could see a higher revenue and earnings growth in the Q4.

Strong Free Cash Flow To Continue

Generated $545 million in free cash flow, up 182% year-over-year, with a 22% quarter-over-quarter growth. Though revenue is stable, in the third quarter, apps revenue increased only by 1% from last year, with $68 million in adjusted EBITDA representing a 19% margin, indicating limited growth.

AXON Algorithm Advancements Might Slowed

Improvements in AXON technology led to significant growth, contributing to a 66% increase in revenue and a 79% increase in adjusted EBITDA for the software platform compared to last year. Anticipated reduction in software flow-through next quarter due to PSU-related vesting costs and increased data center capacity.

We could see some slowdown in the AXON algorithm advancements as APP might need to manage the costs and also compete with data center capacity

Increased Share Repurchase Authorization and E-commerce Pilot Success

Early data from the e-commerce pilot showed substantial returns, often surpassing those from other media channels and experiencing nearly 100% incrementality from AppLovin's traffic. Board approved an increase in share repurchase authorization by $2 billion, bringing the total to $2.3 billion.

Look forward to more share repurchase in fourth-quarter, as this should help to bring their free cash flow.

AppLovin (APP) Price Target

Based on 17 Wall Street analysts offering 12 month price targets for AppLovin in the last 3 months. The average price target is $406.35 with a high forecast of $545.00 and a low forecast of $325.00. The average price target represents a 5.71% change from the last price of $384.40.

I think the market and investors are still very much interested in this stock as they see the future of how mobile advertising would be done with the AXON algorithms.

Technical Analysis - Exponential Moving Average (EMA)

If we looked at how APP have been trading near the 12-EMA, it has managed to stay above the 26-EMA or defend it, we have seen a slight decline at the beginning of 2025, but that is very brief.

But now we are seeing that the bulls are still trying to push the uptrend higher, but we need to see the attempt to come much stronger as RSI is moving towards the overbought region, indicating a buying sentiment.

I am looking forward to see a stronger volume from APP today (11 Feb) trading, and see whether the bulls can succeed to form an uptrend expansions to bring more upside for APP.

Summary

I think the price target now should still have some opportunity because the bulls are still trying to form an uptrend expansions and this could happen post earnings.

So I will be looking closely on how APP would be trading before I decide to take a position.

Appreciate if you could share your thoughts in the comment section whether you think APP could provide an earnings surprise despite the challenges existing.

@TigerStars @Daily_Discussion @Tiger_Earnings @TigerWire appreciate if you could feature this article so that fellow tiger would benefit from my investing and trading thoughts.

Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.