AppLovin’s August Surge: Why This Tech Stock Defied Market Gravity

While traditional markets wobbled, AppLovin’s stock ripped higher—defying skeptics and leaving Wall Street analysts scrambling.

The Advertising Engine Revs Up

AppLovin’s programmatic ad platform hit new efficiency peaks. Its AI-powered bidding algorithms squeezed more revenue from every impression while cutting client acquisition costs. Advertisers flocked to the platform as returns outperformed legacy networks.

Mobile Gaming Moonshot

The company’s first-party game portfolio smashed engagement records. User retention rates jumped as live-ops teams deployed hyper-personalized content. In-app purchase velocity accelerated—proving once again that consumers will gladly pay to skip ads when the gameplay hooks them.

The Infrastructure Edge

AppLovin’s proprietary tech stack bypassed cloud dependency, slashing operational costs while maintaining sub-second latency. Competitors stuck with AWS bills watched margins evaporate as AppLovin’s infrastructure advantage compounded.

Wall Street’s favorite narrative—that mobile advertising had peaked—got steamrolled by actual performance. Maybe they should check their algorithms instead of their Bloomberg terminals.

AppLovin's ad engine takes hold

In the second quarter, AppLovin grew revenue a whopping 77% to $1.26 billion, while earnings per share from continuing operations was $2.28, up 153%. Both figures handily beat expectations. Management also guided strongly this quarter for revenue of $1.33 billion at the midpoint, along with an astonishingly high 81% adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) margin.

AppLovin has put together a seamless platform that allows advertisers to acquire users and monetize mobile games, but is now opening up its platform to more non-gaming companies, such as e-commerce and connected-TV apps.

Management piloted e-commerce customers starting in Q4 last year, and has been methodically ramping up in 2025, actually limiting advertiser participation as AppLovin tweaks its ad engine on new publishers and advertisers. But management noted the holiday season should be a big ramp-up in that segment, which is growing at a higher rate than the overall business, and now accounts for about 10% of revenue.

Coming up on Oct. 1, AppLovin intends to open up self-service function for its AXON platform, which should reduce friction to onboarding advertisers, easing the way for more growth. Management will also be opening up e-commerce advertisers to international markets on that date.

Image source: Getty Images.

AppLovin has the makings of a compounder

AppLovin is not only displaying tremendous growth, but it's doing so with very little incremental spending. Over the past two years, AppLovin's revenue has more than tripled, while net margin has expanded from 20% to 65%.

While AppLovin is now expanding into new ad segments, it's still generating strong cash FLOW and repurchasing stock. So although the stock is up 73% on the year and looks expensive at 77 times earnings, AppLovin's rare combination of high growth and high margins could justify its valuation.

After all, management noted AppLovin only serves a tiny proportion of total addressable advertiser base on its platform, lending Optimism for a long growth runway.