AppLovin is the Worst-Performing Nasdaq-100 Stock of the Week. Here’s Why.

AppLovin (APP) stock plummeted more than 12% over the past 5 days, emerging as the worst-performing stock in the Nasdaq-100 Index ($IUXX) over this time frame. The company's exclusion from the S&P 500 Index's ($SPX) latest rebalancing caused temporary weakness in the stock, despite its substantial market capitalization exceeding $130 billion. 

More concerning are the allegations from short seller Culper Research regarding undisclosed Chinese ownership, specifically claiming that Chinese national Hao Tang controls at least 9.8% of Class A shares through offshore entities. Under this heavy pressure, APP closed the last two sessions below its 20-day moving average.

What’s Next for APP Stock?

The competitive landscape presents additional challenges for APP, as new players emerge with integrated monetization solutions that could potentially impact AppLovin's market share. The trend toward consolidated platforms combining monetization, attribution, and real-time analytics suggests a market shift that AppLovin must address to maintain its competitive edge.

Early signs of APP’s strategic evolution are evident in its recent sale of the gaming division to Tripledot Studios for $400 million plus equity, signaling a decisive shift toward its core advertising technology business. This move was well-received by analysts, with Morgan Stanley raising its price target to $460, citing improved margin potential. 

AppLovin's AXON machine learning engine has proven particularly valuable in the post-IDFA environment, processing an estimated $10 billion in annual ad spend from gaming clients.

More broadly, the company has demonstrated exceptional financial strength with a 40% year-over-year revenue growth in Q1 2025, accompanied by an impressive 83% increase in adjusted EBITDA, largely driven by its advertising technology segment and Axon 2 AI engine.

Should You Buy the Dip in AppLovin Stock?

The current analyst consensus on Wall Street is projecting 85.7% earnings growth for 2025 and second-quarter earnings at $2.01 per share, representing a 125.8% increase from the previous year. 

APP is rated a “Strong Buy” among the 21 analysts in coverage, and the average price target suggests expected upside potential of 27.32%, based on Friday’s close. However, with a 60-month beta of 2.53 - indicating the stock is much more volatile than the broader market - APP is best reserved for investors who have a healthier-than-usual appetite for risk.