AppLovin Rallies on Strong Q3, Raises Q4 Outlook

Revenue in the third quarter rose 55.5% from a year earlier to $2.18 billion, beating the $2.07 billion analysts expected. Adjusted earnings came in at $4.30 a share, ahead of the $4.04 estimate. More important for traders, fourth-quarter revenue guidance of $2.365 billion to $2.395 billion came in well above the $2.25 billion consensus, while Chief Executive Adam Foroughi said AppLovin’s new ad models are only partly rolled out.

That leaves room for further upside if execution holds, and analysts have started lifting targets. But the stock’s valuation has also stretched fast: AppLovin now trades at about 12 times sales, versus roughly 2 times for the broader industry, leaving the rally vulnerable if the company stumbles in the fourth quarter or the ad-model transition disappoints.

The rerating is spilling into the wider ad-tech group. Unity climbed 7% after reporting its first GAAP-profitable quarter, giving investors another data point that parts of the digital advertising and mobile software complex are stabilizing.

Trade Desk, by contrast, fell 24% as the market continued to punish slower-growth names that do not have the same near-term earnings momentum. The divergence underscores how selective investors have become in ad tech: cash-generating platforms with upside to guidance are being rewarded, while companies seen as more exposed to a softer demand backdrop are being sold.

With AppLovin trading well above its 50-day moving average and momentum readings stretched, the next test is whether the company can deliver on the elevated Q4 forecast. The stock’s next leg will likely depend on whether the ad-model rollout keeps translating into revenue growth fast enough to justify the richer valuation.