Why AppLovin stock rose another 30% last month

Mobile app monetization company shares AppLovin (NASDAQ:APP) The price rose 29.8% in October, according to data from S&P Global Market Intelligence. This is a big step considering the company hasn't released any financial results or made any other announcements. Rather, the stock rose thanks to Wall Street.

For comparison, AppLovin had a market cap of just $3 billion at the beginning of 2023. That's not enough to attract much attention from the analyst community. However, strong financial results have seen AppLovin stock rise 278% in 2023 and so far in 2024 it is up more than 300%. In short, it is now a much larger company and analysts have had to start covering it on behalf of their clients.

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In October, many analysts either began covering AppLovin for the first time or changed their price targets. And in many cases, these price targets have been revised upwards.

When prominent analysts do this, it increases attention and engagement for stocks like AppLovin. After Wall Street's bullish commentary made its way onto more radars, AppLovin stock continued its climb in October.

In 2023, AppLovin increased its revenue by almost 17%, and its profit fluctuated from a loss of $193 million in 2022 to a net profit of $357 million in 2023. In the first half of 2024, these trends intensified. Sales are up another 46% year-to-date and the company posted net income of $546 million in the first half of the year.

AppLovin's high-margin artificial intelligence (AI)-powered software revenue drives both growth and profits. In short: Business is simply too good to ignore any longer. And many analysts believe there is still plenty of room for growth.

AppLovin will report financial results for the third quarter of 2024 after the market closes on November 6th. At the midpoint of management's guidance, the company expects to increase revenue by 30% year-over-year. Additionally, the company expects adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) of $630 million to $650 million, which would be a quarterly record.

It's worth noting that AppLovin just passed the one-year anniversary of its AI software update that drove its current growth rate, so that catalyst will no longer be around. Management believes that the company can achieve annual growth of 20 to 30% in the long term. Part of it, however, assumes that it can diversify from primarily being used to monetize gaming apps to monetizing apps in other categories and on other platforms, such as connected TV.

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