Influencers' favorite stock dropped a crushing 50%. Is it over?
Just last year, it was among the most admired names on the market. It grew at a pace most tech companies can only dream of, and it made money in a way you'd rarely expect from such a fast-growing company. Operating margins above 80 percent, revenue growing by double digits year over year quarter after quarter, and an AI story investors loved so much that the stock became a regular topic on investment networks and retail investor communities worldwide.
Key points
AppLovin's stock fell from a record high of $745.61 to under $312, a drop of more than 50 percent, even though revenue in Q2 2026 grew 53 percent year over year.
The slide started with second-quarter results, when the company missed analyst estimates for the first time after a long streak, due to a delay in the next generation of its AXON AI model.
The key question is how much of the decline was caused by real business problems and how much by compression of an extremely high valuation that previously traded at over 45 times earnings.
In 2025, AppLovin divested its original gaming business and became a pure AI advertising platform, which also changes how its historical numbers should be read.
The market is now testing whether expansion into e-commerce advertising can replace the maturing mobile gaming market as the next growth engine, and the answer is not yet clear.
The stock price rose from single digits to over $700 in less than two years. The company transformed from a marginal player in mobile advertising into one of the world's most valuable advertising platforms, with a market cap that at its peak ranked it among tech giants. Analysts raised price targets one after another, and retail investors liked it so much that it earned the nickname of the favorite stock of financial influencers.
But then came the turn. Within a few weeks, the stock lost about half its value. Yet the company continues to report revenue growing by double digits annually and continues to generate exceptionally high margins. The question more and more investors are asking is simple: if the business still grows this fast, why did the market value its shares at half of what they were a year ago? We're talking about the American advertising and AI technology company AppLovin, traded under ticker $APP.
What happened to the stock
AppLovin's stock journey was extraordinary even by tech sector standards. From around single digits in 2022, when the company went through a profit crisis, the price climbed above $500 in early 2025 and hit a record high of $745.61 at the turn of 2025 and 2026. Market capitalization at that point exceeded $200 billion; today it's about $104 billion.
The turning point came with second-quarter results released on August 5, 2026. AppLovin reported revenue of $1.924 billion, only about one percent below the estimate of around $1.935 billion. Yet the stock plunged 16 to 21 percent that day and has not recovered since. It was the first quarter after a long streak where the company regularly and significantly beat estimates, so even a small stumble was enough to break market confidence.
It's important to distinguish what changed in the business and what only in investors' heads. Revenue grew 53 percent year over year, net income rose 55 percent to $1.267 billion, and EBITDA margin improved year over year from 81 to 84 percent. Those are not numbers of a company whose business is collapsing. CEO Adam Foroughi admitted on the analyst call that the pace of AI model improvement was slower than usual in the quarter and the next step forward came just after its end, meaning it was more a matter of timing than a fundamental problem. The market nonetheless reacted as if it were something more serious, because the multiple at which the stock traded was so stretched that even the slightest hint of hesitation was enough.
"Our pace of meaningful model improvement was lower than usual this quarter and the next significant step forward in its performance came just after the quarter ended."
Adam Foroughi, CEO of AppLovin