OPTO first covered AppLovin [APP] back in October 2024. On Foresight, our Substack channel, we noted that the stock “has a highly influential position within its market, selling both its own games and a leading, performance-based customer acquisition tool to the sector”.
Furthermore, it looked like mobile gaming was past its 2022 dip and “could be set to offer sustained, sectoral growth through the remainder of the decade”.
We cautioned, however, that there were “significant growth expectations baked into AppLovin’s current share price”.
Nearly a year and a half later, how are our prognostications holding up?
Pretty well, actually.
Shortly after the article went live, APP stock began to climb steeply. While the stock experienced volatility, including a February selloff, it has since resumed climbing and remains well above October 2024 levels.
As of March 5, AppLovin is up 47.54% over the last 12 months, and 589.73% over the last five years. Having started 2026 on a high, its year-to-date loss of 28.35% is less impressive although, as noted, it seems to be on the rise once again.
Strong Q4 Sparks Negative Reaction
Q4 2025 was the strongest quarter in AppLovin’s history. The company reported revenue of $1.66bn, surpassing the $1.62bn analysts had expected, while EPS came in at $3.24 versus a $2.97 consensus forecast. Profitability was equally striking: adjusted EBITDA margins reached 84%, an exceptionally high level for a company operating at AppLovin’s scale.
Over the past 12 months, AppLovin generated roughly $4bn in free cash flow while maintaining revenue growth of about 40%, indicative of both strong operating leverage and sustained demand for its platform.
Despite these results, the market reaction was sharply negative: APP stock fell 29.25% following the announcement.
Why?
One possibility is that investors had already priced in high expectations. Equally, concerns over slower growth in non-gaming ads, near-term execution risk and lofty…