AppLovin’s Earnings Could Prove Critical For Stock Sentiment (NASDAQ: APP)

AppLovin's stock (NASDAQ: APP) is trading down 2.70% today, with the company set to release their Q1 earnings after the closing bell. With analysts predicting a healthy YoY increase in both earnings per share as well as revenue, expectations are set high for the company, after a difficult start to the year.

Analysts project Q1 2025 revenue of $1.38 billion (a 30.28% year-over-year increase) and earnings per share (EPS) of $1.96. With the firm beating on top and bottom lines in each of the past two quarters, markets will be looking for more of the same.

View From The Street

Jefferies have just this week maintained a Buy rating on the stock, with a $460 price target, citing robust gaming ad sector resilience and successful e-commerce advertiser onboarding. The firm highlighted AppLovin’s ability to capture over 10% of total budgets from e-commerce pilot brands, positioning it as a top ad channel.

• Bullish Perspectives: Piper Sandler ($425 target) and Morgan Stanley (Overweight rating) highlight AppLovin’s dominance in mobile gaming ads and AI innovation.
• Cautious Stances: Wells Fargo and Loop Capital expressed concerns over valuation (EV/EBITDA of 46.01x) and regulatory risks but maintained Buy ratings.
• Price Targets: Analysts project a wide range from $200 to $650, reflecting a wide split between bulls and bears.

Divestiture of Gaming Unit and Focus on AI

AppLovin’s decision to sell its mobile gaming division for $900 million in February 2025 marked a strategic shift toward becoming a “pure advertising platform”. This move aligns with its long-term vision to leverage its AI-powered AXON 2.0 platform, which contributed to a 73% surge in advertising revenue in Q4 2024.

The company’s CEO, Adam Foroughi, emphasized that the gaming unit’s divestiture allows AppLovin to concentrate on scaling its AI-driven ad tech solutions for e-commerce and non-gaming verticals.

The stock’s beta of 4.06 indicates extreme volatility relative to the market. A pennant pattern observed in February 2025 suggested a bullish breakout target of $754, but resistance at $525.15 (52-week high) and support at $290 remain critical levels.

AppLovin’s transformation into an AI-centric ad tech leader has ignited growth optimism, yet challenges loom large. The upcoming Q1 2025 earnings report will be pivotal in validating its strategic direction, with the stock down 13.31% after a hugely impressive 2024 (+700%). Bulls will be looking for signs that APP can return to it's previously lofty valuation, however markets may have changed.