AppLovin Corporation (APP) Presents Growth Opportunity Amid Recent Pullback
AppLovin Corporation (APP) has caught our attention as a compelling GARP (Growth at a Reasonable Price) opportunity following Citigroup’s recent addition of the stock to their GARP basket. Despite short-seller attacks and market volatility, APP shows strong fundamentals and potential for continued outperformance.
Why APP Now?
AppLovin shares experienced a significant 12% decline in February after short sellers Culper and Fuzzy Panda released critical reports alleging questionable business practices. The CEO promptly refuted these claims as “false and misleading,” but the damage to the share price was already done.
This pullback has created what appears to be an attractive entry point for a company that has delivered extraordinary performance, with the stock up 442% over the past 12 months despite recent turbulence.
Strong Analyst Support
Bank of America continues to recommend APP as a top pick, emphasizing that the recent price decline offers an attractive entry point at a discounted valuation:
“APP remains our top pick under coverage, with multiple catalysts through 1H25 to sustain the rally,” wrote analyst Omar Dessouky. “Both profit margins and our LT growth forecast handily exceed almost any of its comparables, and it stands on the precipice of transforming the mobile game industry into a new e-commerce advertising medium.”
The analyst consensus is strongly bullish, with 18 of 26 analysts rating APP as either “Strong Buy” or “Buy.” The average price target of $502.66 represents a potential upside of over 53% from current levels.
Catalyst: $500 Million Share Buyback
AppLovin recently disclosed in a regulatory filing that its board has modified the terms of a prior buyback authorization, making $500 million immediately available for share repurchases. This significant capital allocation decision signals management’s confidence in the company’s intrinsic value and future prospects.
Technical Analysis
Despite the recent pullback, APP’s long-term technical picture remains constructive. The stock is trading well above its 200-day moving average, indicating that the primary uptrend remains intact. With bearish short reports now mostly priced in and strong institutional support, the stock appears positioned to resume its upward trajectory.
The GARP Opportunity
As Citigroup equity strategist Drew Pettit noted, the current market environment favors GARP stocks: “In aggregate, there are still more stocks now than earlier this year on the Growth side of the ledger that have more attainable implied earnings or free cash flow growth expectations baked into prices.”
AppLovin fits this profile perfectly, offering robust growth potential with more reasonable valuations following the recent pullback.
