AppLovin (APP) shares are down 65% so far in 2026, the worst performance in the S&P 500 as of end-October, as fears that AI could disrupt its adtech business have weighed on the stock. Its fundamentals remain strong: first-half revenue rose 56% year over year to $3.8 billion with a 66% profit margin, and the company forecasts about $2.1 billion in revenue for the current quarter at an 83% adjusted margin. The author argues that the stock's high valuation earlier in the year may have been a major factor behind the decline. At 18 times trailing earnings versus about 24 for the average S&P 500 stock, the author believes the market may have overreacted and that the shares could be worth considering for investors comfortable with risk and volatility.
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- Did The Market Read AppLovin Stock Right?
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.
- How Has AppLovin's Story Changed?
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.
- AppLovin Has Dropped 60% in 2026: One Wall Street Pro is Convinced It Will Triple in Price
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.
- Are You Overpaying For AppLovin Stock Versus Its Rivals?
AppLovin shares have fallen more than half over the past year and trade at 20.0 times earnings, below Meta Platforms and Magnite. Over the latest four fiscal quarters, the company posted 60.6% revenue growth and kept 77.4% of revenue as operating profit, compared with 8.3% and 15.6% for Magnite. Revenue growth has slowed each quarter, from 68.2% in fiscal Q3 2025 to 52.8% in fiscal Q2 2026, and management guided for 46% to 48% growth in fiscal Q3 2026. The growth is driven by improved ad models that AppLovin is now selling to advertisers outside gaming, including through its Ads Manager platform. The article concludes that investors are not overpaying for AppLovin and says the fiscal Q3 2026 revenue report will be the key measure to watch.
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AppLovin's stock has plunged 58%. The article argues that its AI advertising engine still has room to drive long-term growth.
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This comparison pits AppLovin (APP), a software provider that helps mobile apps grow and monetize, against Pinterest (PINS), a visual discovery and shopping platform. AppLovin's FY 2025 revenue was nearly $5.5 billion, up 70%, with net income of about $3.3 billion and a 60.8% net margin; its risks include limits on data from Apple and Alphabet, securities class actions and a legal challenge over inappropriate ads reaching children. Pinterest's FY 2025 revenue reached about $4.2 billion, up 15.8%, with net income of $416.9 million and a 9.9% net margin; its risks include dependence on user engagement, search algorithm changes and reliance on Amazon for cloud infrastructure. Pinterest has the lower P/S ratio, while AppLovin trades at a higher forward P/E. The author favors AppLovin for Q2 2026 revenue growth above 50%, despite a slight revenue miss and a sharp stock drop after the report, and views Pinterest as a long-term story with 18% Q2 revenue growth.
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