Navigating Turbulence: AppLovin and Robinhood as Contrarian Buys Amid Tariff Uncertainty and Earnings Resilience

Market volatility has long been a defining feature of high-growth tech and fintech stocks, but the confluence of Trump-era tariffs, macroeconomic headwinds, and divergent earnings performance has created a unique landscape for contrarian investors. AppLovin (APP) and Robinhood (HOOD) stand out as two companies navigating this turbulence with contrasting strategies and outcomes. While both face challenges from rising tariffs and regulatory scrutiny, their recent earnings and operational resilience suggest they could be compelling long-term opportunities for investors willing to look beyond short-term noise.

AppLovin: A High-Margin Play on Advertising and AI

AppLovin's Q2 2025 results underscore its dominance in the mobile advertising space. The company reported $2.39 in earnings per share (EPS), far exceeding the $1.96 consensus, and revenue of $1.26 billion, up 17% year-over-year. Excluding the divestiture of its gaming business, core revenue growth surged 77%, driven by its AI-powered ad-tech platform. Adjusted EBITDA nearly doubled to $1.02 billion, with margins hitting 81%, a testament to its lean operations and pricing power.

Despite a slight revenue miss (a -1.56% surprise), AppLovin's guidance for Q3—$1.33 billion in revenue and $1.07–$1.09 billion in adjusted EBITDA—reflects confidence in its ability to scale. The company's strategic pivot to self-serve advertising platforms and international expansion, including a referral-based system launching in October 2025, positions it to capture underserved markets. However, its P/E ratio of 68.76 and a recent valuation premium over its fair value estimate suggest skepticism about sustaining growth. For contrarian investors, this premium could be a risk, but AppLovin's strong free cash flow ($768 million YOY) and $1.2 billion in cash provide a buffer against macroeconomic shocks.

Robinhood: Diversification and Resilience in a Volatile Sector

Robinhood's Q2 2025 performance was equally impressive, with $989 million in net revenue (up 45% YoY) and $386 million in net income (up 105% YoY). Transaction-based revenues surged 65% to $539 million, driven by crypto, options, and equities trading, while net interest income rose 25% to $357 million. Adjusted EBITDA of $549 million (up 82% YoY) highlights its ability to monetize user activity efficiently.

The company's strategic acquisitions—Bitstamp and WonderFi—have expanded its crypto and institutional capabilities, while its global expansion into Europe and new product launches (e.g., Robinhood Strategies, crypto staking) diversify revenue streams. Robinhood's P/E ratio of 69.9x and P/S ratio of 31.9x are lofty, but its 99% YoY growth in total platform assets ($279 billion) and 3.5 million Gold subscribers (up 76% YoY) indicate a durable user base. The recent 3% stock dip following raised expense guidance ($2.15–$2.25 billion for 2025) may present an entry point for investors who believe in its long-term vision.

Tariff Headwinds and Strategic Adaptation

Trump-era tariffs, including a 10% baseline on global goods and 25% on cloud services, have pressured tech and fintech firms. AppLovin's reliance on AI-driven ad-tech and its shift to self-serve platforms reduce exposure to supply chain disruptions, while Robinhood's focus on digital assets and nearshoring mitigates costs. Both companies have also prioritized cost discipline: AppLovin's operating margin of 81% and Robinhood's 56% operating expense ratio (down from 72% in 2024) demonstrate operational rigor.

Contrarian Case for Both Stocks

AppLovin and Robinhood are trading at stretched valuations, but their earnings resilience and strategic adaptability suggest they are not overbought in the traditional sense. AppLovin's AI-driven ad-tech and international expansion could justify its premium if it maintains margins, while Robinhood's diversified revenue streams and crypto integration position it to benefit from secular trends. For contrarian investors, the key is to assess whether these valuations reflect over-optimism or a realistic discount for macro risks.

Investment Advice:
- AppLovin: A buy for investors who believe in the long-term potential of AI-driven advertising and its ability to execute on international expansion. Monitor Q3 guidance and the October 2025 self-serve platform launch.
- Robinhood: A speculative buy for those comfortable with its high multiples and confident in its ability to scale crypto and institutional services. Watch for progress in the WonderFi acquisition and regulatory developments.

In a market where fear often overshadows fundamentals, AppLovin and Robinhood offer a reminder that volatility can create opportunities for those who focus on durable competitive advantages.