Applovin Corporation (NASDAQ:APP) shares are tumbling on Wednesday as fears of AI disruption weigh heavily on the software sector. The stock’s decline comes following a sector-wide sell-off, adding pressure as broader markets edge lower, with the S&P 500 down 0.35%. Economic Times reports.

• AppLovin shares are sliding. What’s behind APP decline?

AI Disruption Fears Send AppLovin Stock Lower

AppLovin shares plummeted Wednesday, extending losses from Tuesday as investor concerns about AI’s potential to disrupt the mobile advertising market intensified.

New platforms like CloudX, which aim to automate ad operations, have raised alarms about the future of companies heavily invested in ad tech, including AppLovin. This development comes at a critical time for AppLovin, which derives a significant portion of its revenue from advertising technology. The emergence of AI-driven solutions threatens to reshape the mobile ad ecosystem, further complicating the outlook for AppLovin’s business model.

The broader market is experiencing a mixed day, with the Technology sector down 1.45% while the Dow Jones is up 0.59%.

AppLovin’s Technical Indicators Highlight Weakness

AppLovin stock is trading 29.9% below its 20-day simple moving average (SMA) and 36% below its 50-day SMA, indicating significant short-term weakness. Over the past 12 months, shares have increased by 5.04% and are currently positioned closer to their 52-week lows than highs.

The RSI is at 30.40, which is considered neutral territory, although it’s close to being oversold. The MACD is below its signal line, indicating bearish pressure on the stock. The combination of neutral RSI and bearish MACD suggests mixed momentum.

• Key Resistance: $429.00
• Key Support: $385.00

AppLovin’s Ad Tech Business Faces AI Challenges

AppLovin is a vertically integrated advertising technology company that acts as a demand-side platform for advertisers, a supply-side platform for publishers and an exchange facilitating transactions between the two. About 80% of AppLovin’s revenue comes from the DSP and AppDiscovery.

The company’s primary tool for future growth is AXON 2, an ad optimizer operating within the DSP that allows advertisers to place ads according to specified return thresholds. Given the current news regarding AI disruption, AppLovin’s significant ad tech exposure raises concerns about its revenue stability and market position.

AppLovin Earnings and Analyst Outlook Eye Growth

Investors are looking ahead to the next earnings report on Feb. 11.

• EPS Estimate: $2.93 (Up from $1.73 YoY)
• Revenue Estimate: $1.61 billion (Up from $1.37 billion YoY)
• Valuation: P/E of 54.5x (Indicates premium valuation)

Analyst Consensus & Recent Actions:

The stock carries a Buy Rating with an average price target of $772.94. Recent analyst moves include:

• Needham: Upgraded to Buy (Target $700.00) (Jan. 26)
• Evercore ISI Group: Initiated with Outperform (Target $835.00) (Jan. 14)
• Morgan Stanley: Overweight (Raises Target to $800.00) (Jan. 13)

Valuation Insight: While the stock trades at a premium P/E multiple, the strong consensus and 69% expected earnings growth suggest analysts view this growth as justification for the 93% upside to analyst targets.

AppLovin’s Stock Price Drops Amid AI Concerns

APP Price Action: AppLovin shares were down 12.75% at $402.98 at the time of publication on Wednesday, according to Benzinga Pro data.

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