AppLovin Slides 4.32% with $2.47B Volume Rank 28th in Market Activity as Earnings Report Hinges on Ad Revenue Growth and Margin Expansion Post-Divestiture

On August 5, 2025, AppLovin (APP) fell 4.32% with a trading volume of $2.47 billion, ranking 28th in market activity. The stock has surged 380% over the past year but remains 40% below its 52-week high. Earnings expectations for its Q2 report, scheduled for August 6, highlight a focus on advertising revenue growth and margin expansion following the divestiture of its gaming segment. Analysts anticipate adjusted EPS of $1.96 and $1.22 billion in ad revenue, excluding the apps division. First-quarter performance showed 71% YoY ad revenue growth to $1.16 billion, with 81% EBITDA margins and 1.5 million monthly active payers. The Axon 2 platform is credited for enhancing ad targeting, driving quadruple the ad spend on its platform. However, execution risks persist, including concerns over the sustainability of share buybacks and free cash flow conversion post-divestiture.

Investor attention will center on whether AppLovin can maintain its ad revenue momentum without the lower-margin apps business. The company’s adjusted EBITDA rose 92% to $943 million in Q1, while average revenue per monthly active payer (ARPMAP) increased to $52. Despite these gains, the stock trades at 40 times forward earnings, reflecting elevated expectations. The Zacks Consensus estimates Q2 ad revenue at $1.23 billion, a 72% YoY rise, with adjusted EBITDA projected at $1 billion. These metrics underscore AppLovin’s reliance on its ad tech infrastructure to justify its valuation. However, the divestiture’s long-term impact on profitability and capital structure remains a critical uncertainty.

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