AppLovin Bounces Back: More Cash for Stock Buybacks

AppLovin, the mobile app development company, has seen a significant rebound in its share price, jumping over 20% in pre-market trading on March 4, 2025. The company topped quarterly earnings and sales estimates, issued upbeat first-quarter guidance, and announced an expansion of its stock buyback program. This article explores the reasons behind AppLovin's resurgence and the implications of its increased cash allocation for stock buybacks.



Strong Holiday Season and Market Growth

AppLovin's strong performance can be attributed to a combination of factors, including a robust holiday season, growth in the mobile app advertising market, and bidding enhancements to its platform. The company's software platform segment performed exceptionally well, generating $576 million in revenue, representing year-over-year growth of 88% and sequential growth of 14%. This impressive performance was driven by the company's AI-enhanced AppDiscovery user acquisition solution.



Upbeat Guidance and Cash Allocation

Looking ahead, AppLovin projects adjusted earnings to range between $475 million and $495 million for the first quarter, significantly above the Street forecast of $440 million. Its top line guidance of $955 million to $975 also easily surpasses the consensus view, which analysts had pegged at $912 million. The company's cash position allows it to allocate more resources towards share repurchases, with an expanded stock buyback program of $1.25 billion.



Chart Resistance and Market Volatility

While AppLovin's share price has surged, it may face chart resistance around $76, where the stock may run into overhead resistance from a countertrend peak that formed in mid-February 2022. Trading volumes have increased in the lead-up to earnings, indicating accumulation of the stock. If the price continues to trend high post-earnings, investors should keep an eye on the $76 level.



Conclusion

AppLovin's strong performance, driven by a robust holiday season and growth in the mobile app advertising market, has led to an increase in its share price and cash allocation for stock buybacks. The company's upbeat guidance and expanded stock buyback program signal a commitment to shareholder value. However, investors should remain vigilant about potential chart resistance and market volatility as the stock price continues to rise.