AppLovin (APP) shares surged nearly 30% in after-hours trading on Wednesday following strong fourth-quarter earnings that exceeded Wall Street expectations. The company also provided an optimistic outlook for the current quarter, further increasing investor confidence.
The AI-driven advertising platform, which specializes in monetizing gaming apps through targeted ads, projected first-quarter revenue between $1.36 billion and $1.39 billion, surpassing analysts’ forecast of $1.32 billion. Executives revealed that $1 billion of net sales would come from AppLovin’s advertising segment, emphasizing that the company is still in the early stages of enhancing its AI models.
As of Wednesday’s close, AppLovin’s stock had gained 17% since the start of the year and skyrocketed over 700% in the past 12 months, driven by the growing demand for AI-powered advertising solutions. After reaching an all-time high (ATH) in early December, the stock consolidated within a pennant pattern, typically signaling a continuation of the uptrend. Thursday’s expected strong opening could set the stage for further gains.
Technical indicators support the bullish momentum, with the relative strength index (RSI) above 70, suggesting strong buying pressure. However, overbought conditions could lead to temporary pullbacks due to profit-taking.
Price Targets and Support Levels
Using the measured move technique, analysts estimate an upside price target of $754 by adding $357 (the prior uptrend’s gain) to the pennant’s upper trendline at $397. This level may prompt investors to take profits.
On the downside, the stock may find support at:
- $290, aligning with the pennant’s low and a key level from November.
- $168, near the 50-period moving average and a past consolidation range.
- $116, a deeper support level tied to the stock’s November 2021 swing high, could appeal to long-term investors seeking entry points.
AppLovin’s strong earnings, AI-driven growth, and technical setup suggest continued upside potential, albeit with possible short-term pullbacks.
