New York, Feb 12, 2026, 10:51 AM ET — Session underway
- AppLovin’s shares dropped roughly 18% in late morning trading following the release of its quarterly report and guidance.
- The adtech company surpassed Wall Street’s sales expectations for the December quarter and projected stronger revenue for the first quarter.
- CEO Arash “Adam” Foroughi told analysts the company was experiencing its “strongest operating performance” even as investors fretted over AI and competition.
Shares of AppLovin Corporation dropped roughly 18% to $375.13 on Thursday, continuing the decline that started following its quarterly earnings report late Wednesday. The stock kicked off trading at $402.45 before sinking to an intraday low of $375.13 amid heavy volume.
This drop hits hard because AppLovin was valued on near-perfect execution. Even a slight sign that growth is leveling off or that larger competitors are stepping up can send the stock tumbling quickly.
This arrives during a week when investors are on edge about whether ad budgets will shrink if the economy takes a downturn. For AppLovin, which touts improved targeting and stronger returns on ad spend, the real challenge comes when marketers begin cutting back.
AppLovin announced late Wednesday that strong demand for its advertising services and AI-driven tools pushed fourth-quarter sales past expectations. The company reported $1.66 billion in sales for the December quarter, beating analysts’ average forecast of $1.60 billion. Looking ahead, it projected first-quarter revenue between $1.75 billion and $1.78 billion, outpacing the $1.70 billion estimate, according to LSEG data cited by Reuters. Despite this, shares dropped nearly 6% in after-hours trading. 1
AppLovin’s earnings release showed a fourth-quarter net income of $1.10 billion and adjusted EBITDA, a key operating profit metric, hitting $1.40 billion. Free cash flow came in at $1.31 billion for the quarter. The company also repurchased and withheld 0.8 million shares, spending $481.7 million, leaving $3.28 billion still available under its buyback authorization.
During the earnings call, CEO Arash “Adam” Foroughi tackled the recent volatility in the stock head-on, highlighting that the company is “delivering the strongest operating performance in our history.” He dismissed concerns about Meta Platforms encroaching on AppLovin’s in-app ad space, arguing it would be “blatantly against Apple’s terms” for Meta to use deterministic bids on opt-out traffic. 2
The Meta question boils down to a core investor concern: can a deep-pocketed player push auction prices up and squeeze margins and take rates in mobile ads? Foroughi noted that Meta already bids on traffic with an identifier but stays out of the “no ID” traffic, which he estimates makes up around two-thirds of the full-screen ad units it currently targets.
The downside is clear. If competition pushes ad prices higher quicker than AppLovin boosts conversion rates, margins will shrink and their guidance will seem less cautious after the fact. Increased spending to ramp up new products might hurt profits, even if it fuels growth down the road.
Investors are keen to see if AppLovin’s recent ventures can deliver steady revenue, beyond just isolated success stories. While management highlights e-commerce and the self-serve rollout, the market usually wants clear data, especially with such volatile stock movement.
Traders will spend the rest of the week digesting analyst revisions after earnings calls while bracing for Friday’s U.S. Consumer Price Index report. That data could shake up rate forecasts and shift risk appetite in growth stocks. 3
