Cloud-based marketing company AppLovin (APP) stock jumped more than 25% higher on Thursday following the company’s “beat and raise” quarterly earnings report.
AppLovin is a technology company that provides a mobile app advertising platform, offering marketing, monetization, and analytics tools to help app developers grow their businesses.
The company also features real-time bidding, marketing automation, and a suite of tools for game developers, alongside owning a portfolio of mobile games.
The company reported its fourth quarter earnings results after the bell on Wednesday.
For the quarter, AppLovin reported earnings per share of $1.73, a full $0.48 better than analysts expectations. The company’s top line revenue of $1.37 billion also beat its target, reflecting 44% growth over last years’ fourth quarter results.
In addition, AppLovin’s management raised their revenue guidance for next quarter to a much wider margin that Wall Street analysts had expected.
The beat and raise report has investors buying APP shares on heavier trading volume Thursday as the stock traded above $500 for the first time. Wednesday’s trading volume ahead of the earnings report saw a rise in interest, suggesting that investors were turning optimistic on the earnings report.
Today’s spike higher shattered a wide 22% trading range that AppLovin shares have traded between since early December.
That volatile range displays the likelihood that traders, not investors, have been very active with short-term trading strategies to benefit from the wide range.
Longer-term investors should expect that today’s spike higher will result in a similar trading range for the next 2-4 weeks as the stock consolidates around the $500 price level.
Wall Street analysts are extremely bullish on the outlook of AppLovin, displayed by the 19 out of 24 buy recommendations on the stock. This also suggests that investors aren’t likely to see upgrades from Wall Street.
Bottom line is that AppLovin could be referred to as a “stair step stock” based on the fact that shares have seen large spikes higher followed by a trading range until the company’s next earnings report.
AppLovin shares remain in a long-term bull market trend with a price target of $600.
