Shares of AppLovin (APP 2.29%) were moving higher last month as the adtech company bucked some of the headwinds in the software sector.
It was a roller coaster month for the stock, with shares trading up nearly 25% at one point, and AppLovin finished April up 12%, according to S&P Global Market Intelligence. As you can see from the chart below, a few strong days in the middle of the month were responsible for the stock's gains.
What happened with AppLovin last month
Like the rest of the software sector, AppLovin slipped on April 8 as Anthropic announced its new Mythos AI model, which was reportedly too powerful to be released to the general public and could be a cybersecurity threat.
AppLovin bounced back with the help of some favorable analyst notes. Macquarie initiated coverage on the stock with an outperform rating and a price target of $710, implying upside of roughly $710, citing an "attractive, multi-year growth opportunity."
The following week, Argus initiated coverage with a buy rating and a price target of $520, noting that its performance has been strong even as the stock has been hurt by broader concerns about software-as-a-service (SaaS) stocks.
After heating up on a broader rebound in the software sector, the stock fell in line with a post-earnings sell-off in ServiceNow, one of the biggest SaaS stocks, and a stock that has been one of the biggest targets of disruption fears, and it's fallen more than 50% from its peak in late 2024. ServiceNow matched estimates in the quarter, but margin compression sent the stock tumbling and led to fears that its conventional seat-based model is facing a threat from new AI programs like Anthropic's Claude Code.
AppLovin has a much different focus, on adtech, but investors nonetheless see it as having similar vulnerabilities.
Image source: Getty Images.
What's next for AppLovin
AppLovin is set to report third-quarter earnings on Wednesday, and the stock is likely to make a big move. AppLovin has broken out in recent years as it pivoted from being a mobile gaming developer to selling the adtech it developed alongside those games.
Analysts are expecting revenue to increase 19.6% to $1.78 billion, which includes a headwind for the sale of the mobile game business a year ago, and for adjusted earnings per share to jump from $1.67 to $3.45. Considering the company's growth, the stock is starting to look attractively priced at a forward P/E of 30.
