Saturday, April 1, 2023

AppLovin Stock Is A Sign Of The Times Buy


Mobile app development platform Applovin Corp (NASDAQ:) stock is riding the wave of mobile gaming and in-app advertising. Mobile apps have become a sign of the times and continue to flourish at a tepid pace. AppLovin provides the artificial intelligence (AI) powered tools to analyze, develop, automate, manage, market, monetize, and optimize mobile gaming apps. They are here to stay and continue to grow as they are sticky and conveniently at the tip of your fingers at any moment to access.

AppLovin is benefitting from this part of the new normal. The pandemic spurred more digital migration. Post-pandemic will continue to push that trend as businesses rebound on the reopenings. The Company has over 200 mobile app games in its portfolio. The Company homepage keeps a running meter of over 7.6 billion downloads and growing. Shares originally tanked off it’s $80 IPO but has since rallied as investors become more aware of this potential powerhouse. Investors seeking to capitalize on the group of mobile apps can consider following AppLovin stock for opportunistic pullback levels to gain exposure.

Q1 Fiscal 2021 Earnings Release

On May 12, 2021, AppLovin reported its fiscal Q1 2021 for the quarter ending April 2021. The Company reported an earnings-per-share (EPS) loss of (-$0.05) versus a profit of $0.01 in same period year ago. Revenues grew 132% year-over-year (YoY) to $603.9 million. Organic revenues rose 89% YoY.

Adjusted EBITDA rose 110% to $131 million. AppLovin CEO Adam Foroughi stated:

“We are excited to deliver record revenue in our first earnings report as a newly public company. Our record growth 1Q21 results are driven by the powerful combination of our integrated business model, incorporating software, content, and data. Additionally, in April 2021 we closed on the previously announced acquisition of app measurement leader Adjust as well as completed the acquisitions of two more top grossing games: West Game and Tornado Slots. As we continue to grow our content portfolio, gain access to data, improved the efficacy of our marketing software, we see a path to outsized growth for years to come.”

Full-Year 2021 Revenue Outlook

AppLovin raised its total revenues for fiscal 2021 to range between $2.65 billion to $2.70 billion indicating 83% YoY growth. Total adjusted EBITDA is expected between $680 million to $700 million, indicating 100% YoY growth.

Conference Call Takeaways

CEO Foroughi set the tone:

“First, we are a marketing software company that helps mobile app developers attract new users and grow their business. Our most important objective is to focus on growing our software platform, and our key business decisions always link back to this objective.”

He elaborated on the 90% YoY growth in Business Software segment. The pandemic had a “negligible” impact on its business as their audience primarily play casual games on the go. Growth in previous two quarter was driven by improvements to their machine learning engine and AXON, launched in late 2020. These two alone significantly grew its customer base and average revenue per customer. He noted the closing of the Adjust acquisition in April providing access to over 2,000 potential clients, attribution analytics products and a sales force. The Company seeks to expand its app portfolio which include over 200 games and 40 million daily active users (DAUs) utilizing 15 studios. He noted:

“Today, our apps are some of the world’s most popular mobile games, including Project Makeover, Wordscapes, Matchington Mansion, Clockmaker, Bingo Story, Final Fantasy 15 and many more. We’re able to grow these games because of our seasoned team, accretive M&A and, most importantly, our marketing expertise and cost synergies we get from marketing our apps on our software platform.”

Applovin Stock Chart

Applovin Stock Chart

APP Opportunistic Pullback Levels

Using the rifle charts on the weekly and daily time frames provides a precision view of the landscape for APP stock. The weekly rifle chart is still materializing but the rising 5-period moving average (MA) sits at the $80.92 Fibonacci (fib) level. The weekly triggered the market structure low (MSL) on the breakout out above $70.17. The market structure high (MSH) sell triggers on a breakdown under $77.59. The daily rifle chart has a make or break with the 5-period MA sloping down to $83.01 as it nears a crossover down through the 15-period MA at $82.81. The daily stochastic has formed a mini inverse pup oscillation down through the 70-band. Prudent investors can monitor for opportunistic pullback levels at the $80.92 fib, $78.72 fib, $76.24 fib, $72.60 fib, $70.33 fib, and the $65.88 fib. Upside trajectories range from the $92.53 fib up to the $112.55 level.

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