Applovin Corp (APP)|90dModal Stance
bearish
Probability Score55%
Forecast Chart
Base Target
Bull Target
Bear Target
Bull Target
$540.00
+18.2%
Probability: 15%
Base Target
$475.00
+4.0%
Probability: 30%
Bear Target
$385.00
-15.7%
Probability: 55%
Pivot$518.31
Resistance Level (R1)$676.51
Support Level (S1)$298.62
Chance of breaking S1 in 72h: 1%
Why the Model thinks this
Bull Case:The bull thesis is centered on the massive short-covering potential following the CapitalWatch retraction and the 'overstated' AI disruption fears noted by Benchmark. APP's AXON engine continues to deliver ROAS (Return on Ad Spend) advantages that are difficult for competitors to replicate in the short term, and the Q4 earnings beat proves the business model remains highly cash-generative. A move back toward $550 represents a 20% recovery from current levels, which is consistent with historical 'dead cat bounces' that turn into full trend reversals in the software vertical.
Institutional accumulation is evidenced by the rising volume on green sessions (26.4M on the most recent close). Morgan Stanley's price target of $800 suggests that if the AI narrative shifts from a 'threat' to an 'enabler' (via AXON's e-commerce expansion), the stock will rerate rapidly. Risk: Failure to break the $482 resistance level could trap bulls. I am 15% confident in a $540.00 target over the next 2 months as the market refocuses on earnings yield over rumors.Base Case:The base case is driven by a stabilization around $450-$480 as the market digests the Q4 earnings beat of $2.89 EPS vs estimates. Over the next 2 months, the stock is expected to enter a consolidation phase to repair the damage from the January short-seller report, with support holding above the recent $406 close. Revenue of $1.66 billion (3.1% surprise) provides a fundamental floor that prevents a complete collapse back to 2024 levels, but the current 60-day trend is too damaged for an immediate return to highs.
Historical precedent for high-growth software stocks suggests that following a 40% drawdown, a period of 8-12 weeks of 'sideways' base-building is required to churn out weak hands. Evercore ISI’s $835 target provides institutional backing, but macro sensitivity to cooling ad spend will cap gains. Risk: Continued volatility in the software sector could extend the drawdown. I am 30% confident the price targets $475.00 within the next 2 months.Bear Case:The primary driver for the bear case is the severe degradation of technical momentum, with the stock losing 36.6% of its value in less than two months ($721.37 down to $456.81). The presence of 'Project Genie' and other AI-driven disruptions represents a structural threat to AppLovin's core AXON engine, potentially compressing the 80%+ margins that currently justify its premium valuation. If retail advertising data softens in the next 2 months, the stock is likely to retest the psychological support floor at $360.12 established on Feb 6.
Secondary factors include the recent UBS price target slash from $840 to $686, which signaled a shift in Wall Street's willingness to overlook high multiples during periods of volatility. While the CapitalWatch retraction removes legal risk, the 'where there is smoke, there is fire' sentiment often persists in liquid tech stocks. Risk: A systemic tech rally could lift APP regardless of fundamentals. I am 55% confident in a $385.00 target over the next 2 months due to the broken technical chart.
Institutional accumulation is evidenced by the rising volume on green sessions (26.4M on the most recent close). Morgan Stanley's price target of $800 suggests that if the AI narrative shifts from a 'threat' to an 'enabler' (via AXON's e-commerce expansion), the stock will rerate rapidly. Risk: Failure to break the $482 resistance level could trap bulls. I am 15% confident in a $540.00 target over the next 2 months as the market refocuses on earnings yield over rumors.Base Case:The base case is driven by a stabilization around $450-$480 as the market digests the Q4 earnings beat of $2.89 EPS vs estimates. Over the next 2 months, the stock is expected to enter a consolidation phase to repair the damage from the January short-seller report, with support holding above the recent $406 close. Revenue of $1.66 billion (3.1% surprise) provides a fundamental floor that prevents a complete collapse back to 2024 levels, but the current 60-day trend is too damaged for an immediate return to highs.
Historical precedent for high-growth software stocks suggests that following a 40% drawdown, a period of 8-12 weeks of 'sideways' base-building is required to churn out weak hands. Evercore ISI’s $835 target provides institutional backing, but macro sensitivity to cooling ad spend will cap gains. Risk: Continued volatility in the software sector could extend the drawdown. I am 30% confident the price targets $475.00 within the next 2 months.Bear Case:The primary driver for the bear case is the severe degradation of technical momentum, with the stock losing 36.6% of its value in less than two months ($721.37 down to $456.81). The presence of 'Project Genie' and other AI-driven disruptions represents a structural threat to AppLovin's core AXON engine, potentially compressing the 80%+ margins that currently justify its premium valuation. If retail advertising data softens in the next 2 months, the stock is likely to retest the psychological support floor at $360.12 established on Feb 6.
Secondary factors include the recent UBS price target slash from $840 to $686, which signaled a shift in Wall Street's willingness to overlook high multiples during periods of volatility. While the CapitalWatch retraction removes legal risk, the 'where there is smoke, there is fire' sentiment often persists in liquid tech stocks. Risk: A systemic tech rally could lift APP regardless of fundamentals. I am 55% confident in a $385.00 target over the next 2 months due to the broken technical chart.
Analyst Ratings
84.0%of 25 ratings
Buy
84.00%
Hold
12.00%
Sell
4.00%
Source(s): MarketBeat | TipRanks | Yahoo Finance | Zacks Investment Research
Drivers of Forecast
News & Sentiment0.45 (Slightly Positive)
- AppLovin surpassed Street forecasts for Q4 2025, posting revenue of $1.66 billion and exceeding the consensus earnings estimate of $2.89 per share.
- Short seller CapitalWatch publicly retracted and apologized for unsubstantiated money laundering allegations against a major shareholder, clearing a critical reputational risk.
- UBS lowered its price target to $686 from $840 citing a more cautious outlook on valuation despite maintaining a Buy rating.
- Evercore ISI initiated coverage with an Outperform rating and $835 price target, identifying AppLovin as a dominant mobile gaming ad tech platform.
- Analysts argue that Google's Project Genie AI tool could ultimately benefit AppLovin by increasing the volume of games requiring monetization services.
- Wedbush sharply lowered its price target to $465 from $800 to account for a broader software valuation reset and regulatory headwinds.
- Needham upgraded the stock to Buy, highlighting that the e-commerce growth inflection in 2026 could mirror TikTok's rapid trajectory.
- The company is successfully pivoting its AXON AI engine to capture e-commerce market share, with early data suggesting it is competitive with Amazon's ad territory.
Technical Indicators
MA (50)
$613.4
MACD
Bearish
RSI (14)
47.19
Volume
+35% above avg
*Watch for short below $298.62 support breakdown
Analysis Date
Feb 11, 2026 | 10:19 PM
Signals & Anomalies
- Volatility Expansion and Price VolatilityThe stock has moved from a low of 360.12 to a high of 738.01 within the provided 20-day timeframe, representing a 104% range expansion. Recent price action shows wide daily ranges, such as the session moving from a 705.02 open to a 618.32 close, indicating high realized volatility and aggressive intraday price discovery.
- Exhaustion Gap and Institutional DistributionA significant price gap occurred between the close of 647.72 and an open of 705.02. Despite this 8.8% gap up, the price failed to hold, closing significantly lower at 618.32 on 13M volume. This 'gap and crap' pattern often signals a temporary local top as institutional selling overrides retail momentum.
- Volume-Price Divergence at HighsVolume peaked early in the trend at 43.5M shares during the move to 406.72, but as the price reached its recent peak of 721.37, volume decelerated to 21.4M shares. This negative volume divergence suggests diminishing conviction and buying power at current elevated price levels above the $700 handle.
- Resolution of Reputational OverhangThe retraction of money laundering allegations by CapitalWatch acts as a fundamental 'de-risking' signal. This removes a primary source of non-systemic volatility, aligning with the Q4 earnings beat of $2.89 EPS and potentially allowing the stock to re-rate based on its AXON engine performance rather than short-seller sentiment.
Market Regimebearish
Upcoming Catalysts
- AXON 3.0 Platform Expansion UpdateTBD
- Annual Shareholder Meeting2026-05-21
- Q1 2026 Earnings Release2026-05-07
- Dividend Payout (Projected)2026-03-31
- Q4 2025 Earnings Call2026-02-11