Expert Insights

AppLovin (APP) will deliver earnings after today’s close against a backdrop of sharp declines in the software sector, and more broadly against a narrative of sector rotation away from high-flying tech and artificial intelligence names into more defensive stocks. Analysts are looking for earnings to come in at $2.89 against last year’s figure of $1.73 (+67.1%) and for revenue of $1.61B versus $1.37B year-over-year. 

AppLovin, which offers a software platform for advertisers, as of yesterday’s close has plunged about -36% since Dec. 22 when it failed to overtake its previous highs near 745 from late September. The stock rebounded near some previous lows of 386 from August, making a lower close but for the most part hanging on near this prior area of support. 

Analysts likely will be tuned in to AppLovin’s gaming advertisement and seasonal e-commerce revenue, which could drive sales slightly above guidance, according to a note from Oppenheimer. However, others seemed less optimistic, as UBS and RBC both cut their price targets on the stock earlier this week to $686 and $700, respectively. Both kept their outperform ratings. 

The options market shows high volatility for the Feb. 13 expiration that will capture this earnings event, with a potential expected move of +/-64 (roughly 14%) for a range of approximately 394 to 522. This 394 level may be interesting to technical traders, as it roughly aligns with the previously described supportive zone between about 386 to 410 as well as the past year’s largest volume node according to the Volume Profile study. Meanwhile, the area near 507 presents a potential resistance hurdle based on a gap opening from Sept. 5 and subsequent lows that are now resistance.