AppLovin Corporation APP stock has shown an outstanding upsurge over the past six months. The stock has skyrocketed 289%, outperforming the 40.5% rally of the industry and the 12.8% rise of the Zacks S&P 500 composite.

Six Months' Price Performance

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APP’s performance is significantly stronger than that of its competitors, Cadence Design Systems, Inc. CDNS and Workday, Inc. WDAY. CDNS and WDAY have risen 6.2% and 21.2%, respectively, over the same period.

As of the last trading session, the stock closed at $319.6, 7.3% lower than the 52-week high of $344.8. APP is trading above its 50-day moving average, indicating a bullish sentiment among investors.

APP Trades Above 50-Day SMA

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Given the remarkable upsurge in the APP stock, investors might be inclined to buy it. However, the lingering question prevails whether it is the right time to jump on the bandwagon and buy the stock. Let us find out.

AXON 2.0 Boosts APP’s Performance

APP’s position as a matchmaker is crucial because it gathers data and feeds to train and optimize the AI model called AXON 2.0, which has boosted the company’s performance in the recent quarters.

The top line rose 38.6% year over year in the third quarter of 2024 and 10.9% subsequentially. The company’s EBITDA witnessed a 72.1% surge in the third quarter of 2024 and a 20% increase from the preceding quarter. The net income increased more than 100% from the year-ago quarter in the third quarter of 2024 and grew 40.1% from the second quarter of 2024.

Although the possibility of slowed growth is looming in the in-game advertising segment, along with the uncertain impacts of non-gaming ventures, the company seems to be well-positioned for continued rise on the back of its technological advancements and efforts to expand strategically.

AppLovin’s E-Commerce Expansion Seems Promising

The company’s e-commerce pilot program has been underway since early 2024 and has delivered some promising results. In the second quarter of 2024, management informed that advertisers in the pilot program witnessed substantial returns, often beating other media channels and observing nearly 100% growth from its traffic. This means that the traffic generated by APP’s platform aided it, and the same did not subside the existing channels of clients. All in all, AppLovin has received positive feedback for this pilot project.

The company is focused on creating a direct partnership with a select group of advertisers of all proportions to refine and prove the platform’s capabilities. We can expect the next phase in mid-2025, which will involve launching a self-service model allowing advertisers to use the platform by themselves.

APP’s Liquidity Beats Industry

The company’s liquidity position is strong, with the current ratio of 2.41 at the end of the third quarter of 2024, way higher than the industry’s 0.85. A current ratio above 1 suggests that the company can easily pay off its short-term obligations.

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AppLovin’s Robust Top & Bottom-Line Prospects

The Zacks Consensus Estimate for the company’s 2024 revenues is pegged at $4.6 billion, indicating 39.9% growth from the year-ago reported level. For 2025, the top line is anticipated to increase 20.4% year over year.

The consensus estimate for earnings in 2024 is pegged at $4.1 per share, implying a more than 100% rally from the prior-year actual. For 2025, the bottom line is anticipated to grow 42% on a year-over-year basis.

APP’s EPS Estimates Move North

In the past 60 days, seven estimates for 2024 earnings have been revised upward, with no downward revisions, reflecting strong analyst confidence in the company. For 2025, seven estimates also moved north over the past 60 days versus no southward revisions. This indicates analysts' confidence in the company's ability to enhance its financial performance soon.

Here's Why You Must Buy APP Shares Now

AppLovin offers a booming investment opportunity. The company’s recent performance is a testament to its ability to use an AI model called AXON 2.0 in its favor to boost its top line. APP’s strategy to expand its e-commerce business provides room for further appreciation. The company has robust top and bottom-line prospects, and a healthy liquidity position.

We recommend investors buy the stock now since we firmly believe that the stock price will surge on the back of swift technological advancements and upward estimates, reflecting analyst confidence.

APP currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

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