AppLovin Soars After Strong Quarterly Earnings and Guidance

Shares of AppLovin skyrocketed 26% to $58.94 in premarket trading on Thursday, following the app-monetization company's impressive quarterly earnings and guidance. Over the past year, AppLovin's stock has surged over 200%, capturing the attention of investors.

In the fourth quarter, AppLovin exceeded Wall Street's expectations with per-share earnings of 49 cents, surpassing the projected 35 cents. The company also reported revenue of $953.3 million, which outperformed estimates of $928.7 million.

Wedbush analysts Nick McKay and Michael Pachter attribute a significant portion of AppLovin's success to artificial intelligence (AI). According to the analysts, the introduction of an AI-based engine has led to more efficient ad spending for AppLovin's clients, particularly those in the mobile gaming industry.

William Blair analysts Ralph Schackart and Mary Donaldson concur with this line of thinking, suggesting that AppLovin's positive momentum will persist as long as the economy remains stable. They emphasize the importance of the company's Axon 2.0 product, an updated version of their previous app-user matching tool that utilizes data to deliver relevant advertising content.

Meanwhile, Needham analysts Bernie McTernan and Stefanos Crist believe that AppLovin's technology-driven outperformance is here to stay. They express their confidence in the company's ability to sustain its success relative to the market. However, they maintain their Hold rating for now.

For the first fiscal quarter, AppLovin anticipates total revenue between $955 million and $975 million, slightly higher than analysts' predictions of $962 million.