AppLovin Down Big Today But Has Massive Upside According to this Wall Street Pro

Over the last few months, shares of Applovin (APP) exploded from about $75 to a high of $519.75 thanks to strong earnings, guidance, and bullish analysts.

Key Points About This Article 

• According to analysts at Citi, the stock has come under pressure with a few bearish reports.
• For instance, short seller reports from Fuzzy Panda and Culper Research questioned APP’s growth outlook and valuation.
• However, with a good deal of negativity priced into the now oversold APP stock, investors may want to use that current weakness as an opportunity to buy on the cheap.
• Keep your portfolio well-protected with reliably safe stocks with yield. You may also want to grab your free copy of “2 Legendary High-Yield Dividend Stocks“ now.

In fact, in February, the company posted EPS of $1.73, which crushed expectations of $1.25. Revenue of $1.37 billion was well above estimates of $1.26 billion. Advertising revenue even soared 73% to about $1 billion. And analysts at Bank of America said, the “magnitude of Q4 beat (was) completely unexpected.”

The company also projected a revenue range of between $1.355 billion and $1.385 billion, which was above analyst expectations of $1.321 billion. Still, Bank of America believes even that impressive guidance is still conservative.

Unfortunately, thanks to a massive market pullback marred by tariff fears, inflationary concerns, and now fears of a potential recession, shares of APP just dropped from its lofty high of $525 to a recent low of $251.41, where it’s now considered oversold.

However, don’t write off the APP stock just yet.

According to analysts at Citi, the stock has come under pressure with a few bearish reports.

For instance, short seller reports from Fuzzy Panda and Culper Research questioned APP’s growth outlook and valuation. Fuzzy Panda believes the company’s growth is built on a house of cards. Culper said APP’s success in mobile gaming was tied to the exploitation of permissions on mobile devices. Culper noted:

“We believe AppLovin’s recent success in mobile gaming stems from the systematic exploitation of app permissions that enable advertisements themselves to force-feed silent, backdoor app installations onto users’ phones, with just a single click – an event that is often inadvertent thanks to the Company’s notorious UX gimmicks,” as quoted in a Hagens Berman Sobol Shapiro LLP press release.

Still, Citi analysts are maintaining a $600 price target on the APP stock with a buy rating. The firm still believes APP’s fundamentals are still sound and that e-commerce revenues will improve as its pilot program improves. The firm also believes APP could buy back about $1.2 billion worth of stock this year.

In short, a good deal of negativity has been priced into the now oversold APP stock. Investors may want to use that current weakness as an opportunity to buy on the cheap.