AppLovin Stock Forecast: AI Ad Upgrade Puts $322.49 in Focus

CEO Adam Foroughi told investors that a partial rollout of AppLovin’s new advertising models let customers spend more while still meeting their return targets. Gaming advertising grew nearly 50% from a year earlier. Management gave no firm timetable for completing the rollout on the earnings call.

For a game publisher, that distinction matters. A campaign can produce excellent returns on a small budget and run out of profitable customers as spending rises. If AppLovin can find another group of players likely to spend enough to justify the cost of reaching them, the publisher has a reason to keep raising its budget.

Installation volume rose just 2% year over year, compared with the 55% increase in net revenue per installation disclosed in the quarterly filing. Much of the growth therefore depends on what AppLovin can earn from the activity already passing through its platform. A slowdown in that measure would leave relatively little help from volume.

Third-quarter revenue rose 55% to $2.185 billion. Net income increased 72% to $1.439 billion, or $4.30 per diluted share under GAAP. Operating income also rose, from $1.079 billion to $1.709 billion. The improvement reached the operating line before interest and taxes, a useful cross-check on headline earnings in AppLovin’s financial statements.

Foroughi sees particular scope for the model to improve results where AppLovin has less historical data, including newer advertisers. That could help it reach retailers beyond its established gaming customers. Management also acknowledged that a model improvement can benefit gaming in one quarter and consumer advertising in another.

I would put more weight on retailers keeping their budgets on the platform after the holidays than on a burst of spending around Black Friday. Returning customers would provide stronger evidence that the software can repeatedly find profitable sales for advertisers outside gaming.

AppLovin expects fourth-quarter revenue of $2.365 billion to $2.395 billion. The $2.38 billion midpoint implies about 9% growth from the September quarter. Management expects adjusted EBITDA, its measure of earnings before interest, taxes, depreciation, amortization and certain other expenses, of $1.995 billion to $2.025 billion. Its projected margin of 84% to 85% compares with 84% in the third-quarter earnings release.

That gives investors two ways to judge holiday execution. Revenue near the midpoint would show advertisers increased their spending again. Holding the projected margin at that volume would show how much of the extra business AppLovin kept after the costs of running and improving the platform.

Operating cash flow and free cash flow both rounded to $1.4 billion. AppLovin also spent $1.4 billion on shares repurchased and shares withheld to cover employee equity taxes. The board added $3.2 billion to its repurchase authorization, taking the amount available at October-end to $3.6 billion. Future purchases depend on how much of that authorization management uses.

Before earnings, APP had rebounded from $225.53 toward the top of a falling four-hour channel at $275.95. The supplied candle ended at $271.17, above the 50-period exponential moving average at $268.36. That chart captured the recovery before the announcement. The $333.80 after-hours trade cleared even the higher resistance at $322.49, moving the next decision well above the old channel.

I lean slightly bullish if buyers can turn $322.49 into support and finish a four-hour regular-session candle above it. That would put $333.80 back in view as a reference for the rebound. If sellers reclaim $322.49, the gap becomes vulnerable to a retreat toward $298.36 and the prior 100-period average at $293.37.

Before the release, RSI, a momentum gauge, was 57.79, and MACD had crossed above its signal line while still below zero. Both readings describe the earlier candle. If the gap unwinds all the way back into the old channel, a four-hour close below $268.36 would invalidate that earlier recovery and expose $250.53.

APP Price Chart - Source: Tradingview

Key Levels

• Latest completed close: $271.75 on November 4
• Immediate upside reference: $333.80 after hours
• Upside confirmation: a regular-session hold above $333.80 would extend the breakout
• First support test: $322.49
• Downside references: $298.36 and $293.37, then the old channel at $275.95
• Pre-earnings RSI: 57.79, moderately positive

Why did AppLovin shares jump after earnings?

Advertisers increased spending as the upgraded models helped them meet their return targets. Revenue and profit grew, and management expects another sequential sales increase in the holiday quarter.

Which price would confirm the post-earnings move?

A four-hour regular-session close above $322.49 would support the breakout. A subsequent move through $333.80 would show buyers extending the gain beyond the verified late-session print.

AppLovin’s earnings support a constructive view as long as advertisers can raise budgets and sustain their returns. For the stock, $322.49 is the test. A four-hour close below it would weaken the post-earnings setup and bring $298.36 into focus.