AppLovin (APP) Stock Falls Despite Beating Q4 Earnings Estimates

TLDR

• AppLovin reported Q4 earnings per share of $3.24, beating Wall Street’s estimate of $2.95, with revenue reaching $1.66 billion versus expected $1.6 billion.
• Stock dropped as much as 9% in after-hours trading despite the earnings beat, as Q1 2026 revenue guidance showed slower growth at 52% versus previous quarters.
• CEO Adam Foroughi addressed AI competition concerns directly, stating the company is “delivering the strongest operating performance in our history” with its own AI models.
• AppLovin stock already down over 30% in 2026 following multiple headwinds including short-seller reports, SEC investigation, Google’s Project Genie launch, and new AI competitor CloudX.
• Unity Software, a key competitor, reported disappointing guidance Wednesday morning, sending its stock down 26% and weighing on AppLovin shares during regular trading.

AppLovin posted strong fourth-quarter results Wednesday afternoon. But investors weren’t impressed.

The mobile advertising company reported earnings per share of $3.24. That beat Wall Street’s consensus estimate of $2.95 by nearly 10%.

Revenue hit $1.66 billion for the quarter. That topped expectations of $1.6 billion and marked a 66% jump from the prior year after adjusting for a 2025 divestment.

AppLovin Corporation, APP

The company’s guidance for the current quarter also exceeded analyst projections. AppLovin forecasted continued strong profit margins with adjusted EBITDA expected between $1.465 billion and $1.495 billion.

Despite the solid numbers, shares dropped as much as 9% in after-hours trading. The stock had already fallen 3.4% during regular trading hours.

The market’s negative reaction likely stems from the growth slowdown visible in the guidance. AppLovin’s Q1 2026 revenue outlook suggests growth of 52%, down from higher rates in recent quarters.

Competition Concerns Mount

Analysts on the earnings call pressed CEO Adam Foroughi about competition from Meta Platforms in AppLovin’s digital advertising niche. Foroughi pushed back hard.

The company operates an ad platform that facilitates advertising around mobile apps, particularly games. It’s become a leader in one of the last untamed areas of digital advertising.

But 2026 has brought serious headwinds. The stock is down over 30% this year alone.

Short-seller reports in 2025 claimed widespread violations of Apple and Google app store policies. Neither company has publicly acknowledged any wrongdoing. An ongoing SEC investigation into data collection practices adds to the uncertainty.

January brought more drama. A short-seller report from CapitalWatch made claims about ties to international crime syndicates. AppLovin denied the allegations and CapitalWatch later retracted the claim.

AI Threats and Opportunities

The AI narrative has whipsawed AppLovin shares in recent weeks. Google’s January debut of Project Genie, an experimental AI that generates three-dimensional virtual worlds, crushed gaming stocks. AppLovin dropped 17% that day.

Then in February, startup CloudX launched an AI-powered mobile advertising product. The market saw it as fresh competition. AppLovin stock fell 16% that day.

Foroughi addressed the AI competition narrative head-on during Wednesday’s call. “For the past few weeks, there’s been a lot of discussion about how AI and competition will challenge our business,” he said.

He noted a disconnect between market sentiment and business reality. “If the market chooses to price our stock based on fear while we continue to compound revenue, cash flow and product capability, we’ll stay focused on execution and let our results speak over time.”

Free cash flow jumped 88% year-over-year in Q4 to $1.31 billion. For the full year 2025, free cash flow reached $3.95 billion, up 91% from 2024.

Full-year 2025 revenue totaled $5.48 billion, marking a 70% increase from the previous year. Adjusted EBITDA for Q4 hit $1.4 billion, representing an 84% margin.

Unity Software reported disappointing guidance Wednesday morning, sending its stock down 26%. Unity competes directly with AppLovin in the mobile advertising space. The Unity news weighed on AppLovin during regular trading before the earnings release.

AppLovin projects Q1 2026 revenue between $1.745 billion and $1.775 billion, representing 5-7% sequential growth.

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