Loop Capital reiterates Buy rating on AppLovin stock after strong Q2

Investing.com - Loop Capital has reiterated its Buy rating and $650.00 price target on AppLovin Corp (NASDAQ:APP), a company currently valued at $132 billion, following the company’s second-quarter earnings report that exceeded expectations. According to InvestingPro data, the company maintains a "GREAT" financial health score, supported by strong fundamentals and market performance.

AppLovin reported revenue growth of 77% year-over-year, representing a 600 basis point acceleration and exceeding consensus estimates by 300 basis points. The company’s adjusted EBITDA grew 95% year-over-year, showing nearly 400 basis points of acceleration and also surpassing consensus by 300 basis points. This performance is backed by impressive gross profit margins of 78.6% and a remarkable 481% return over the last year, as revealed by InvestingPro analysis.

The majority of AppLovin’s 9% quarter-over-quarter revenue growth was driven by gaming customers as the company continues to refine its offering for web-based advertisers, particularly in e-commerce.

For the third quarter, AppLovin provided guidance for revenue growth of 60% to 61% year-over-year, approximately 2% ahead of consensus at the midpoint, implying 5% to 6% quarter-over-quarter growth. Loop Capital views this guidance as conservative, noting it factors in only modest revenue contribution from the divested apps business.

Loop Capital also highlighted that AppLovin’s adjusted EBITDA margin is expected to increase by approximately 60 basis points at the midpoint of guidance for the third quarter.

In other recent news, AppLovin Corp reported its second-quarter 2025 earnings, highlighting a notable earnings per share (EPS) beat, with EPS reaching $2.39, surpassing the forecast of $1.95 by 22.56%. However, revenue slightly missed expectations, coming in at $1.26 billion compared to the anticipated $1.28 billion, a -1.56% surprise. UBS reiterated its Buy rating on AppLovin, setting a $540 price target, and increased its fiscal year 2026 EBITDA estimate to $6.18 billion, citing better-than-expected gaming trends. BTIG also maintained a Buy rating, raising the price target to $547, following the launch of AppLovin’s "Axon Ads Manager," which had been a concern for investors. Goldman Sachs raised its price target to $445, attributing it to strong advertising revenue after AppLovin’s divestment of its Apps business. Wolfe Research increased its target to $425, noting a 77% revenue growth in the second quarter, driven by mobile gaming advertising. These developments reflect AppLovin’s ongoing strategic moves and financial performance.

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