AppLovin (APP, Financial) is taking a beating, dropping nearly 10% at 12.36pm today—its lowest since November 2024. The stock, which soared to a record $510 in mid-February, has now tanked over 50%, fueled by short-seller reports and a broader selloff in high-flying tech names. But Citi Research isn't buying the panic. Analyst Jason Bazinet sees this as more about skepticism toward AppLovin's fast rise and opaque AdTech business model than any real fundamental weakness. He's sticking to his Buy rating and a $600 price target, arguing the market's pricing in a 50% chance the company's equity is worth zero—an overreaction in his view.

Despite the pullback, AppLovin is still up 285% over the past year, and there are solid reasons to stay bullish. The company's eCommerce pilot program raked in $100 million in Q4 2024, proving its ability to expand beyond gaming. Bazinet expects even stronger growth as self-serve tools roll out later this year. Meanwhile, AppLovin's buyback program could reach $1.2 billion in 2025, with the company potentially funneling all free cash flow into repurchasing shares. While some on Wall Street question the valuation, Citi believes even with conservative estimates, the stock is still undervalued at current levels.

Investor sentiment remains divided, but the bulls have the upper hand. Out of 29 analysts surveyed by FactSet, 21 call it a Buy, six are on the fence, and only two say Sell. Citi argues that based on peer comparisons, AppLovin should be trading closer to $550. With a strong foundation, a strategic push into eCommerce, and aggressive share repurchases, this selloff could be an opportunity in disguise.