TLDR
- AppLovin stock dropped 6% on Tuesday to $318.68, its lowest close since May 2025
- BofA analyst Omar Dessouky downgraded APP from Buy to Neutral, cutting his price target to $400 from $430
- Q2 revenue of $1.92 billion missed Wall Street estimates of $1.94 billion, though it grew 52.8% year-over-year
- CEO Adam Foroughi blamed a delay in AI model updates for the shortfall, saying the issue has been addressed
- APP is now down 53% in 2026, with the consensus analyst price target sitting at $573.45
AppLovin stock fell 6% on Tuesday to $318.68, making it the worst performer in the S&P 500 that day. It then hit a new 52-week low of $318.12 on Wednesday.
The sell-off was triggered by a downgrade from BofA Securities analyst Omar Dessouky, who cut his rating from Buy to Neutral and lowered his price target from $430 to $400.
Dessouky’s concern centers on one question: can AppLovin keep growing at 30% year-over-year on an increasingly large revenue base?
“Given APP’s large size in the mobile gaming market, we need more evidence that it can grow 30% Y/Y, on a much higher base of revenue,” he wrote.
The downgrade came about a week after AppLovin reported Q2 results. Revenue came in at $1.92 billion, just under the $1.94 billion Wall Street expected.
EPS of $3.76 matched estimates, and revenue was up 52.8% year-over-year. But in a high-growth stock like APP, a miss is a miss.
CEO Adam Foroughi addressed the shortfall on the earnings call. He said a delay in rolling out updates to AppLovin’s AI models hurt performance during the quarter.
“What matters is that we know what happened, and it’s already been addressed,” Foroughi said.
He explained that when AI model updates go live, advertisers typically increase budgets in anticipation of better returns. Those improvements “landed just after quarter end.”
Growth Model Under Scrutiny
Dessouky also raised questions about AppLovin’s plan to scale up its recommender system models, which management believes can benefit from the same scaling laws seen in large language models.
“Although this thesis sounds plausible, we have not seen evidence to support it,” Dessouky wrote.
AppLovin did not respond to requests for comment.
APP stock is now down 53% in 2026. The stock’s 50-day moving average sits at $462.95, well above current trading levels.
Where Analysts Stand
Not everyone is bearish. Raymond James has a Strong Buy rating with a $640 price target. BTIG maintained a Buy rating, though it cut its target from $640 to $574. Royal Bank of Canada kept an Outperform rating while trimming its target from $700 to $575.
Piper Sandler moved in the same direction as BofA, downgrading from Overweight to Neutral and cutting its target sharply from $665 to $385.
Of 24 analysts covering the stock, two rate it Strong Buy, fourteen rate it Buy, and eight have a Hold. The consensus price target is $573.45.
AppLovin’s Q2 margins remained above 75%, and the company posted a net margin of 64.58% with a return on equity of 193.10%.
The stock has a market cap of $107.06 billion, a PE ratio of 24.50, and a PEG ratio of 0.63. Analysts currently expect full-year EPS of $15.56.
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