Todd Gordon, Founder of Inside Edge Capital, analyzes Applovin's impressive performance, strong growth trajectory, and upcoming earnings report. He highlights the company's unique platform that connects app developers with millions of users, its AI-driven optimization engine, and its potential to benefit from the stabilization of the hardware sector.
Applovin (APP) operates much like an online dating platform, but instead of connecting individuals seeking romantic relationships, it matches mobile app developers with a vast network of over 1.4 billion daily active users. This platform empowers developers to effectively market, monetize, and analyze their applications. Applovin leverages its advanced AI-powered recommendation engine, Axon, to optimize ad campaigns for developers, ensuring targeted user reach.
Additionally, Axon assists game developers in publishing and promoting their gaming applications. The stock was added to our growth portfolio in August 2024 following a breakout from a period of consolidation. Currently, the stock is entering another consolidation phase while demonstrating impressive relative strength amidst the ongoing shakeup in the Chinese AI competition landscape. Despite a 5% decline on Monday, Applovin's shares remain up 10% year-to-date in 2025. My conviction is that, regardless of the timeline, once the hardware sector of western technology companies stabilizes, software and communication companies like Applovin will surge ahead. I intend to increase the target allocation from current levels during the next portfolio re-allocation at Inside Edge Capital.Over the past two years, Applovin has emerged as one of the top-performing names in the market. Its share price has skyrocketed from around $9.00 in 2023 to its current level of $364. Examining the weekly chart reveals a clean breakout from the $115.00 resistance level, a price action that I find particularly encouraging. Looking at the yearly EPS figures, the company's earnings trajectory is remarkable. From making $0.18 in all four quarters of 2022, it jumped to $0.98 in 2023. If the Street estimate for Q4 of 2024, scheduled for release on February 12th, 2025, is met, their earnings will reach $4.06. These represent growth rates of 100%, 444%, and 314%, respectively. Expectations for 2025 forecast an EPS growth rate of only 49%, with an estimated EPS of $6.07. These figures are reminiscent of NVIDIA's impressive performance.Turning to the daily chart, the stock is trending downwards into a blue consolidation pattern, characterized by a well-defined flat base/support level around $310 and a topside resistance level at approximately $375. Earnings are due on February 12th, and analyzing the stock's performance following earnings in the previous four quarters reveals a positive trend. In three out of those quarters, the stock was higher one week later, accompanied by significant trading volume on the earnings date. I anticipate another beat-and-raise quarter for this company and plan to increase my holdings prior to February 12th
TECHNOLOGY SOFTWARE MOBILE APPS AI EARNINGS GROWTH INVESTMENT
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