Key Takeaways
- Shares of AppLovin declined 6% on Tuesday, closing at $318.68, marking the lowest point since May 2025
- BofA’s Omar Dessouky shifted his rating from Buy to Neutral while reducing the price objective to $400 from $430
- Second quarter revenue reached $1.92 billion, falling short of the $1.94 billion consensus, despite a 52.8% year-over-year increase
- Chief Executive Adam Foroughi attributed the revenue miss to postponed AI model enhancements, which have since been resolved
- The stock has plunged 53% throughout 2026, while the average analyst target price stands at $573.45
Shares of AppLovin experienced a 6% decline on Tuesday, settling at $318.68 and ranking as the S&P 500’s weakest performer that session. The stock continued its descent Wednesday, touching a fresh 52-week bottom of $318.12.
The selloff gained momentum following a rating change from BofA Securities analyst Omar Dessouky, who shifted his stance from Buy to Neutral while reducing his target price from $430 down to $400.
Dessouky’s primary skepticism revolves around a critical issue: whether AppLovin can maintain 30% annual growth given its expanding revenue foundation.
“Given APP’s large size in the mobile gaming market, we need more evidence that it can grow 30% Y/Y, on a much higher base of revenue,” he wrote.
This downgrade arrived roughly one week following AppLovin’s second quarter earnings release. The company delivered revenue of $1.92 billion, marginally below the Street’s $1.94 billion projection.
Earnings per share of $3.76 aligned with forecasts, while revenue climbed 52.8% compared to the prior year period. However, for a high-growth name like APP, any shortfall carries weight.
Chief Executive Adam Foroughi provided context around the revenue gap during the company’s earnings conference call. He cited postponed deployment of enhancements to AppLovin’s artificial intelligence models as the culprit behind weaker-than-expected quarterly performance.
“What matters is that we know what happened, and it’s already been addressed,” Foroughi said.
He noted that advertisers generally boost spending when AI model enhancements are released, anticipating improved outcomes. Those enhancements “landed just after quarter end.”
Expansion Strategy Faces Questions
Dessouky additionally expressed uncertainty regarding AppLovin’s strategy to expand its recommender system architecture, which company leadership contends can leverage scaling principles similar to those observed in large language models.
“Although this thesis sounds plausible, we have not seen evidence to support it,” Dessouky wrote.
AppLovin did not respond to requests for comment.
APP stock has surrendered 53% of its value in 2026. The 50-day moving average currently rests at $462.95, substantially above where shares are trading.
Wall Street’s Current View
Bearish sentiment isn’t universal across the Street. Raymond James maintains a Strong Buy recommendation with a $640 objective. BTIG preserved its Buy rating while lowering its target from $640 to $574. Royal Bank of Canada retained an Outperform designation despite trimming its target from $700 down to $575.
Piper Sandler echoed BofA’s cautious approach, downgrading from Overweight to Neutral and slashing its price objective dramatically from $665 to $385.
Among 24 analysts tracking the company, two assign Strong Buy ratings, fourteen recommend Buy, and eight maintain Hold positions. The average target price sits at $573.45.
AppLovin’s second quarter profit margins stayed above the 75% threshold, while the company recorded a net margin of 64.58% alongside a return on equity of 193.10%.
The company carries a market capitalization of $107.06 billion, trades at a PE multiple of 24.50, and shows a PEG ratio of 0.63. Wall Street currently projects full-year earnings per share of $15.56.
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