AppLovin saw a 16.96% decline in its share price over the last week, primarily impacted by significant legal challenges. The company faces a class-action lawsuit from Bronstein, Gewirtz & Grossman, LLC, alleging misleading statements about its financial growth and business practices concerning its AXON 2.0 platform and AI technologies. Compounding this, a report from Fuzzy Panda Research accused AppLovin of engaging in ad fraud and unethical practices, further stressing investor confidence. These developments starkly contrasted with the broader market trend, which saw the S&P 500 and Nasdaq posting third consecutive weekly declines, with the tech-heavy Nasdaq dropping 3.5%. Despite positive economic remarks from Fed Chair Jerome Powell, concerns over tariffs and a lackluster jobs report weighed heavily on market sentiments, potentially exacerbating AppLovin's stock decline in the context of overall unfavorable market conditions.

Take a closer look at AppLovin's potential here.

Over a three-year period, AppLovin's total shareholder return was very large at 507.14%. This notable long-term performance starkly contrasts the recent legal challenges and market volatility. Over the past year, AppLovin surpassed the US Software industry average return of 3.7%. Key contributors to this longer-term success include a substantial increase in net income, evident in Q4 2024's US$599.2 million report, up from US$172.23 million the previous year, and the completion of a comprehensive share buyback plan valued at US$4.74 billion, enhancing investor confidence by reducing share count and increasing earnings per share.

Continued earnings growth has been supported by strategic partnerships, such as MiMedia Holdings Ltd.'s commitment to optimizing monetization across AppLovin's platform. The company's inclusion in the NASDAQ-100 and FTSE All-World Index further highlights its market performance. Despite its high debt levels, including a refinancing deal of US$1.46 billion, AppLovin's ability to consistently enhance earnings has been a significant factor contributing to its impressive long-term shareholder returns.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Companies discussed in this article include NasdaqGS:APP.

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