AppLovin Stock Plummets Nearly 50%: What’s Next?

NEW YORK, NY — AppLovin Corporation’s stock has taken a significant downturn, dropping almost 50% from its recent highs, raising questions about its future trajectory as investors look to navigate an unpredictable market landscape.

As of April 3, 2025, AppLovin’s share price stood at $261.69 after a notable decrease of $28.70, reflecting a change of -9.88% in its market cap, which is currently valued at approximately $99 billion. The stock has seen a dramatic surge over the past two years, climbing over 1,700% from around $15 per share to its peak of over $270.

Despite this impressive growth, the company now faces scrutiny following a significant drop in recent weeks. Analysts noted that AppLovin’s stock has surged by over 293% in the past year alone, illustrating a stark contrast to its current performance. Investors are left pondering whether this decline represents a temporary setback or a more profound issue.

AppLovin’s business model focuses on programmatic, AI-powered advertising which connects developers, advertisers, and audiences in the ever-growing digital advertising space. This approach aligns with evolving consumer habits, as more individuals engage with streaming services, online shopping, and mobile applications. As a result, ad spending has shifted from traditional mediums like broadcast and cable television to digital formats with improved reach.

The company reported a remarkable revenue increase from $2.8 billion to more than $4.7 billion in just three years, positioning it as a strong player in the digital landscape. However, with consensus estimates predicting a revenue generation of $5.7 billion for 2025—an annual increase of 21%—investors are questioning the sustainability of such growth. This figure represents a notable decline from the company’s recent growth rate of 44%, raising the bar of expectations for its performance.

Compounding these concerns, several short-selling companies have alleged that AppLovin’s software may violate app store regulations by improperly collecting user data from platforms such as Reddit, Snap, Meta, and Google. Although Chief Executive Officer Adam Foroughi has contested these allegations, their presence in the market has led some analysts to expect further declines in stock price.

While many experts are optimistic about long-term trends influencing AppLovin’s potential, they caution that the company’s stock might not be suitable for every investor. Observers are particularly wary of the company’s ability to maintain rapid revenue growth amidst increased scrutiny.

If AppLovin meets expectations for 21% revenue growth in 2025, there remains a risk that the stock could decline due to high investor anticipations based on previous performance. Therefore, some analysts recommend that potential investors adopt a cautious stance regarding AppLovin and consider potential volatility in the near future.

Investors willing to endure market fluctuations might still find value in AppLovin, given its critical position in the rapidly expanding digital advertising sector. However, it’s important for investors to conduct thorough research and evaluations before considering purchase, particularly as industry dynamics continue to evolve.

AppLovin is a member of The Motley Fool’s recommended stocks. Experts note that long-term investment strategies provide better prospects than short-term speculation, especially for companies operating in volatile segments like digital advertising.