Inside Edge Capital's Todd Gordon discusses Applovin's strong performance, potential future growth, and why he's looking to increase his holdings before the company's upcoming earnings report.
Applovin (APP) operates much like an online dating service, but instead of connecting individuals seeking romantic relationships, it matches mobile app developers with a vast audience of over 1.4 billion daily active users. The company leverages its AI-powered recommendation engine, Axon, to empower app developers in optimizing ad campaigns by precisely targeting users. Axon also assists game developers in publishing and promoting their gaming applications effectively.
Applovin's stock was added to our growth portfolio in August 2024 following a breakout from a period of consolidation. Currently, the stock is transitioning into another consolidation phase while demonstrating impressive relative strength amidst the recent shakeup caused by the competition in the Chinese AI sector. Although the shares experienced a 5% decline on Monday, they have still managed to gain 10% in 2025. My conviction is that when, not if, the hardware segment of Western technology companies achieves stability, software and communication companies like Applovin will experience significant growth. I intend to increase the target allocation for Applovin in the next portfolio re-allocation at Inside Edge Capital. The company has been one of the top performers over the past two years, surging from approximately $9.00 in 2023 to its current price level of $364. Examining the weekly chart reveals a clean breakout from the $115.00 resistance level, a type of price action that I highly value. Looking at the yearly EPS figures, the company progressed from earning $0.18 in all four quarters of 2022 to $0.98 in 2023. If they meet the street estimate for Q4 of 2024, to be reported on February 12th, 2025, they are projected to earn $4.06. These represent growth rates of 100%, 444%, and 314%, respectively. The expectation for 2025 is an EPS growth rate of only 49% with $6.07 in EPS. These figures resemble those of Nvidia (NVDA).Turning to the daily chart, the stock is currently falling into a blue consolidation pattern characterized by a clearly defined flat base/support level around $310 and a topside resistance level at approximately $375. Earnings are anticipated on February 12th. Analyzing the stock's performance following earnings in the previous four quarters reveals that the stock was higher one week later in three of those quarters, with substantial 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.
APP Applovin Stock Growth AI Technology Earnings Investment Todd Gordon Inside Edge Capital
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