Why AppLovin Stock Was Soaring High Today
Shares of app discovery and monetization company AppLovin (NASDAQ: APP) soared high on Thursday after the company reported financial results for the first quarter of 2024. As of 10:45 a.m. ET, AppLovin stock was up 18% and hitting fresh 52-week highs.
Another great quarter driven by software growth
The star of the show for AppLovin right now is its AXON software, powered by artificial intelligence (AI). The company's software helps companies get their apps discovered, downloaded, and monetized through advertising. AXON was launched almost a year ago, and it's catalyzed the company's software revenue growth.
In Q1, AppLovin's revenue of $1 billion was up 48% year over year, an impressive number. However, software platform revenue of $678 million was up a stunning 91%. This indicates that AXON is ingesting good data and improving, strengthening demand from customers.
Moreover, software revenue is higher margin for AppLovin, which is why its profits are coming in hot as well. In Q1, the company had net income of $236 million. For comparison, it had a net loss of $4 million in the prior-year period.
Growing and profitable, investors celebrated AppLovin today.
Are the good times slowing down?
Looking to the second quarter, AppLovin's management expects revenue of $1.07 billion at the midpoint of its guidance, implying 43% year-over-year revenue growth. But it's worth noting that the company had 11% quarter-over-quarter growth in Q1. By comparison, it expects Q2 revenue to be in line with Q1 revenue.
This could suggest that the initial burst of revenue growth from the launch of AXON is coming to an end. So investors expecting AppLovin to maintain its current growth rate should keep expectations realistic. That said, the company has made some great decisions in the last couple of years to reinvigorate its business. And with its track record, it could keep surprising to the upside.
Should you invest $1,000 in AppLovin right now?
Before you buy stock in AppLovin, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and AppLovin wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $553,959!*
Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than quadrupled the return of S&P 500 since 2002*.
*Stock Advisor returns as of May 6, 2024
Jon Quast has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
Why AppLovin Stock Was Soaring High Today was originally published by The Motley Fool
