Shares of the U.S.-based AppLovin (APP) are going through a rough patch, dropping nearly 30% in the past month. The latest blow came yesterday, with shares sinking over 17% after a shareholder class action lawsuit was filed against the company. The mobile tech firm, known for its marketing platform, is facing mounting legal and market pressures.
AppLovin offers several AI-powered products that help companies extend the reach of their advertising.
More Details on the Lawsuit
The lawsuit represents investors who bought AppLovin stock between May 10, 2023, and February 25, 2025. The lawsuit claims AppLovin misled investors about AXON 2.0 and its AI-driven ad tech while secretly exploiting Meta’s (META) data and using deceptive tactics. It further stated that AppLovin misled investors by concealing its use of a “backdoor installation scheme” to inflate app installs and profits. As a result, shareholders bought the stock at artificially high prices, only to face losses when the truth emerged.
In addition, the lawsuit claims that on Feb. 26, 2025, short-seller reports accused AppLovin of similar allegations. However, Wedbush and UBS defended AppLovin, rejecting the short-seller allegations.
What’s Next for APP Stock?
To be fair, despite its February drop, AppLovin is still up over 300% in the past year. After such a strong rally, a pullback isn’t unusual.
Earlier this week, Benchmark added AppLovin to its “Top Ideas List,” citing strong growth catalysts. Five-star-rated analyst Mark Zgutowicz expects AI-driven ad targeting in the gaming sector, e-commerce expansion, and new self-service tools to fuel revenue growth.
Additionally, Zgutowicz noted that AppLovin has the opportunity to expand its ad inventory as non-gaming ads increase. This could encourage major gaming publishers to open their supply, who have typically avoided displaying ads from competing games. This shift could provide additional revenue opportunities for the company. Benchmark also sees the company’s buyback program boosting earnings per share (EPS).
Is AppLovin Stock a Good Buy?
According to TipRanks, APP stock has received a Moderate Buy consensus rating based on 13 Buys, four Holds, and one Sell assigned in the last three months. The average price target for AppLovin is $530.81, suggesting an upside of nearly 104.5% from its current price.
