AppLovin (APP) stock lost 59.6% in the year to October 29, 2026, while the S&P 500 returned 13.3%, even though both recent reports showed sales growth of more than 50%. The shares fell 19.7% on each day after the February 12 and August 6, 2026 reports, though only the August report clearly missed sales estimates, which management attributed to timing. The stock's trailing price-to-earnings ratio fell from 100.1 at the end of September 2025 to 19.4, below the S&P 500's 22.8, as sales growth slowed from 77.0% to 52.8%. Meanwhile, net income rose each quarter, reaching $4.41 billion over the four quarters to June 2026 versus $2.43 billion a year earlier.
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The article says AppLovin's management has shifted its headline metric from adjusted EBITDA per employee, roughly $3 million at the February 2025 call, to model performance and compute. Operating margin rose to 77.7% in fiscal Q2 2026 from 76.1% a year earlier, while sales grew 52.8% and management said it spends about $0.10 on compute per incremental dollar of revenue. The author argues near-term growth depends mainly on model improvements that management cannot guarantee each quarter, making fiscal Q3 2026 revenue growth against its 46% to 48% guidance, due in November 2026, worth watching. The stock trades at 19.9 times trailing twelve-month earnings versus 22.9 for the S&P 500.
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AppLovin trades at $260.25, down 61.38% year to date, after second-quarter revenue of $1.92 billion missed estimates by 0.94% and adjusted EBITDA fell below guidance on higher computing costs. CEO Adam Foroughi attributed the miss to a slower pace of model improvement, and Wells Fargo, Piper Sandler and Bank of America all downgraded the stock, while a securities class action added pressure. Even so, Q2 revenue grew 52.8% year over year, net income reached $1.27B and free cash flow was $863M, and Q3 revenue guidance is $2.055B-$2.085B. The average analyst target of $476.85 implies 83.2% upside, while UBS's Stephen Ju has the highest target at $790.00 and expects the stock to about triple. The article notes that the next earnings report will be the first real test of the recovery case.
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