AppLovin Stock Rallies After Rough Start To Year. Here's Why.

AppLovin (APP) stock climbed Friday following a report that the advertising technology company is pursuing plans for a new social media platform. AppLovin was among companies that made a bid for TikTok’s U.S. business last year.

AppLovin’s potential social network plans were first reported by Bloomberg Thursday. The report pointed to a job posting on AppLovin’s website seeking a software engineer to “architect the digital backbone of our next-generation social platform.”

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On the stock market today, AppLovin stock gained more than 3% to 424.50. AppLovin’s software helps mobile app developers find new users and sell advertising.

Along with the job posting, Bloomberg’s report noted that AppLovin’s Chief Product and Engineering Officer Giovanni Ge discussed the plans in a Chinese-language podcast.

The executive said the move would be opposite to the way Meta Platforms (META) built a large audience on Facebook and Instagram before developing an advertising system to monetize those apps, according to Bloomberg.

AppLovin has shown interest in running a social media platform before this. The company expressed interest in buying TikTok’s U.S. business last year, following a law that banned TikTok unless its Chinese parent company ByteDance divested ownership. TikTok U.S. was ultimately purchased by a group that includes Oracle (ORCL) and multiple investment firms.

AppLovin Stock: Down 37% This Year

AppLovin stock soared 108% last year and has rocketed more than 1,000% since the start of 2024. But shares are off to a rough start this year, down 37% overall.

Software companies overall have struggled from fears that AI tools developed by Anthropic and OpenAI will prove a new competitive threat.

Meanwhile, AppLovin stock was the target of multiple short-seller reports last year that questioned the company’s business tactics and how it measures data on third-party platforms. AppLovin disputed the claims. Shares fell in October following a report that the Securities and Exchange Commission is investigating the company’s data collection practices.

AppLovin stock slid 18% last Thursday, the day after reporting fourth-quarter results. Earnings per share of $3.24 beat estimates, with 88% year-over-year growth. Revenue for the quarter grew a stronger-than-expected 66% to $1.66 billion.

William Blair analyst Ralph Schackart said the sell-off came as “the market has been fairly indiscriminate with punishing companies that have the perception of an AI-threat.”

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