Stock Market Today: Dow Gains Slightly, AppLovin Reverses 8% Drop Ahead of Earnings

The broader market is rallying on easing inflation fears, with global stocks heading for a record close. This upbeat sentiment, driven by bets on AI boosting corporate earnings, provided a backdrop for a modest Dow Jones gain earlier today. Yet within that flow, AppLovin stock is making a sharp, counter-trend move. The stock is down 8% today, trading at $615.04 after opening near $672. This reversal follows a 8.9% drop over the past 20 days, a notable pullback from its recent highs.

The setup here is a classic tension between a bullish macro trend and a specific stock's weakness. AppLovin's price action is stark: it remains near its 52-week high of $745.61, suggesting the stock has been in a powerful uptrend that is now showing signs of fatigue. The high intraday volatility of 13.11% underscores the choppy, uncertain trading this stock is experiencing. The core question for traders is whether today's sharp decline is a tactical buying opportunity ahead of its upcoming earnings report on February 11, or a sign that the stock's momentum is breaking down. The reversal against a rising market makes it a high-conviction event to watch.

The Catalyst: Earnings Expectations and Valuation Pressure

The immediate catalyst is clear: AppLovin reports its fourth-quarter and full-year 2025 results after the market closes on Wednesday, February 11, 2026. The bar for success is set exceptionally high. Analysts expect Q4 earnings per share of $2.89, a massive 67.1% year-over-year increase. The company has already beaten estimates in its last four quarters, creating a powerful momentum that must now be sustained.

The full-year pressure is even steeper. The consensus expects 2025 EPS of $9.32, implying a staggering 105.7% jump from the prior year. This isn't just growth; it's a near-doubling of profits. For the stock to hold its ground or rally, the report must not only meet these lofty targets but likely exceed them to justify the current valuation. The market's patience for a miss is thin when the growth trajectory is this steep.

This context makes today's sharp 8% drop a critical test. Is it a tactical dip ahead of the report, or a justified risk-off move as the high bar becomes apparent? The stock's valuation already reflects this explosive growth. With a forward P/E of 74.5 and a price-to-sales ratio near 36, the market is pricing in flawless execution. Any stumble in guidance or a hint of slowing momentum could trigger a significant repricing, turning today's drop into a deeper correction. The setup is binary: a clean beat could spark a relief rally, while a miss would likely accelerate the sell-off.

Trading Implications and Key Watchpoints

The immediate trading setup is a high-stakes test of whether AppLovin's explosive growth story can survive its own hype. The stock's 8% drop today against a rising market is a clear signal of profit-taking ahead of the February 11 earnings report. This creates a tactical opportunity, but one that hinges entirely on the company's ability to meet or exceed the near-perfect track record it has built. The primary risk is that the bar is simply too high.

Analyst sentiment provides a bullish counterpoint. Evercore ISI has initiated coverage with an Outperform rating and a price target of $835, implying significant upside from recent levels. This target suggests the firm sees the company's growth runway extending beyond the next quarter. However, that target is a forward-looking view that assumes flawless execution. For traders, the key is to watch for confirmation of that thesis in the coming days.

The single most important event will be the post-earnings investor webinar scheduled for 5:00 PM ET on February 11. This is where management commentary will carry more weight than the numbers themselves. The primary focus must be on guidance for fiscal 2026. Analysts expect EPS to rise 62.5% year over year to $15.14. Any deviation from that trajectory, especially a cut, would likely trigger a sharp sell-off. More broadly, investors need to hear updates on the adoption of AppLovin's self-serve platform, which is a key driver of its growth and margins.

The risk/reward scenario is stark. The reward is a relief rally if the company beats expectations and raises its 2026 guidance, potentially validating the Evercore target. The risk is a repricing lower if the report, while solid, fails to clear the high bar, exposing the stock's premium valuation. Given the stock's recent volatility and the binary nature of the catalyst, the setup favors a sharp move either way once the earnings are in.