APP - AppLovin: A Compelling Investment Opportunity For Growth Investors

2024-05-20 11:29:06 ET

Summary

• AppLovin's stock has risen 41% since its Q4 2023 earnings report, beating the S&P 500.
• The company's first quarter 2024 results exceeded revenue and earnings estimates, with significant growth in the Software Platform segment.
• Its AI-powered Software Platform helps developers market and monetize their apps, and the company expects further growth in its business.

I first wrote about AppLovin (NASDAQ: APP ) a few weeks after it reported its fourth quarter 2023 earnings on February 14, 2024, and I initiated my coverage with a buy. Since that buy call, the stock has been up around 41% compared to the S&P 500 ( SPX ), which only rose 4.51%. The company recently reported its first quarter 2024 results on May 8, beating analysts' revenue estimates by approximately 9% and analysts' Generally Accepted Accounting Principles (GAAP) earnings-per-share ("EPS") estimates by 22%. The stock rose 14% the day after the company released its first-quarter earnings.

Despite the stock trading near its 52-week high of $88.50, there are multiple reasons to invest in it. It's a massive generator of free cash flow, it has high revenue and earnings growth, and the company has made wise use of share buybacks over the last year, sharply reducing diluted average common shares. Additionally, the stock's valuation still leaves room for potential upside. ...

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