The Zhitong Finance App learned that mobile advertising and application technology company AppLovin (APP.US) plummeted by about 20% on Thursday to its lowest level since July 2025 because its previously announced second-quarter revenue rarely met market expectations. Affected by this, several analysts downgraded the stock's rating and lowered its target price.
Matthew Swanson, an analyst at RBC Capital Markets, said in Thursday's investor report: “According to AppLovin's own standards, this quarter's performance was weak, and both revenue and performance fell short of the median guideline and consistent market expectations. Specifically, revenue was US$1,924 million, up 53% year over year, but 0.9% lower than market expectations and increased 3.8% month on month. In terms of profit, adjusted EBITDA was US$1,613 million, profit margin 83.9%, and free cash flow of US$863 million, all lower than market expectations. The pressure on this quarter's results was mainly due to the weakness of the gaming business and the slower pace of 'meaningful model improvement' than expected.”
RBC maintained its “outperforming the market” rating, but lowered its target price from $700 to $575.
Needham maintained a “buy” rating but lowered the target price from $700 to $500.
Needham analyst Bernie McTenan stated in the report: “Overall, our core judgment on AppLovin shares has not changed, and we still believe that it has huge potential for growth. However, the three issues revealed in this financial report — although not serious when viewed separately — are likely to cause investors some concern in the short term: failure to reach the upper limit of the performance guidance range in the second quarter, delays in the launch of new consumer advertising tools, and consumer advertising revenue slightly below our expectations for the second quarter. Having said that, we believe AppLovin's target for the third quarter is attainable, and the boost from the year-end holiday season should be enough to help it regain its valuation premium.”
Wells Fargo downgraded the stock's rating from “over balance” to “equal balance” and drastically cut the target price from $575 to $357.
Wells Fargo analyst Alec Brandolo said, “We believe AppLovin's share of mobile gaming spending is becoming saturated, and future growth will depend more on increasing monetization rates. Currently, AppLovin accounts for 50% of mobile game users' acquisition expenses, and appears to be hitting the share ceiling. Therefore, the future growth of the mobile game business will depend more on the overall expansion of the market and the further expansion of the monetization rate. We believe these growth drivers may only obtain lower multiples in valuation compared to the logic of 'share growth'.”
Additionally, Piper Sandler downgraded AppLovin's rating from “overrated” to “neutral,” and cut the target price almost from $665 to $385. Deutsche Bank lowered the target price from $660 to $580, Raymond James from $640 to $590, and Evercore ISI from $750 to $630.
In contrast, AppLovin's competitor Unity Software (U.US) closed up more than 15% on Thursday after announcing second-quarter results.