Key Points
One year after it soared more than 700%, AppLovin (NASDAQ: APP), the adtech stock that began as a mobile gaming company, had another winning year last year as the company sold off its slow-growth games business, leveraged its AI platform, continued to deliver eye-popping growth, and expanded into new verticals like e-commerce, diversifying away from mobile games. The company also successfully rebuffed several short-seller attacks.
According to data from S&P Global Market Intelligence, the stock finished the year up 108%. As you can see from the chart below, the stock got off to a slow start before surging later in the year, along with a general boom in tech and AI stocks.
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APP data by YCharts
What happened with AppLovin last year
AppLovin’s trajectory was similar to the Nasdaq Composite last year, but more exaggerated, showing investors continued to respond to its impressive growth.
Perhaps, the company’s biggest move last year was the sale of its mobile gaming business to Tripledot Studios for $400 million in cash and 20% equity in Tripledot. The move made sense for AppLovin as it makes the company a pure-play adtech stock, gives it a higher growth rate, and makes it easier for investors to analyze the stock and its future potential. Overall, the sale shows that management’s focus is squarely on the growing adtech business.
AppLovin also continued to deliver impressive results in its quarterly reports. Through the first three quarters of the year, revenue jumped 72% to $1.4 billion to $3.82 billion, and generally accepted accounting principles (GAAP) net income rose 128% to $2.23 billion, giving the company a profit margin of nearly 60%, a good sign of competitive advantage.
The company is seeing momentum in both the gaming and non-gaming sectors, showing its expansion to new verticals has paid off. Its Axon AI advertising technology also continues to be a difference-maker.
Image source: Getty Images.
What to expect from AppLovin in 2026
AppLovin begins 2026 with high expectations for the stock after surging over the last three years due to the breakout of its adtech business.
AppLovin is expensive, trading at a price-to-earnings ratio of 75, but that seems warranted due to its soaring growth. Still, the pieces look to be in place for the stock to deliver another solid year, as long as the ad market remains strong and the stock market moves higher. The company’s new products are resonating. It’s growing fast in Asia, and it’s diversifying into new verticals.
There’s still room for the stock to move higher.
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Jeremy Bowman has positions in AppLovin. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
