AppLovin Stock Pops: Appitizing Momentum Ahead

From a technical perspective, identify a mid-cap stock that has seen extraordinary and consistent performance over a year like AppLovin NYSE:APP it might be difficult.

Surprisingly, compared to the previous year, the software technology company’s shares are up more than 260%. More recently, since the beginning of the year, the company’s shares have already increased by double digits, almost 15%. If that wasn’t enough, as the company approaches its earnings, its shares have formed a bullish consolidation right at 52-week highs. A model that firmly suggests a further rise.

As the bullish momentum shows no signs of slowing down, even after delivering impressive returns, the question remains: Is this a good time to buy stocks?

AppLovin NYSE:APP

AppLovin Corporation, a US-based software company, specializes in developing platforms for mobile app developers. Their solutions include AppDiscovery, which connects advertisers and publishers; Adjustment, an analytics platform for app marketing; MAX, ad inventory optimization with in-app bidding software; and Wurl, facilitating the delivery of streaming video through a connected TV platform.

The company is a growth stock, so its P/E ratio of 155 will be less than attractive to the traditional investor. However, recent earnings have impressed and reflected the company’s growth, with annual sales up nearly 50% over the previous five years.

AppLovin last posted earnings data on November 8, 2023, reporting $0.30 per share (EPS) for the quarter. This beat the consensus estimate of $0.27 by $0.03. The company generated revenue of $864.26 million during the quarter, beating analysts’ estimates of $794.43 million.

The company’s earnings are expected to rise 77.27% for the year, from $0.88 to $1.56 per share. The company confirmed that its next quarterly earnings report will be released on Wednesday, February 14, 2024.

Analysts are bullish and insiders are selling

Analysts are bullish on APP, with a Moderate Buy consensus rating based on seventeen analyst ratings. The consensus price target sees a moderate upside of just under 1% based on the $46.31 price target.

Over the past year, APP insiders have consistently dumped shares without any corresponding purchases. A total of eight insider sales totaling $1.68 billion in APP stock were recorded. Considering the notable rise in its value during this period, it is not at all surprising that insiders have been dumping significant amounts of the stock.

A bullish consolidation has formed in the APP

APP stock has spent over five months consolidating short-term moving averages near the critical and above the rising 200-day simple moving average (SMA) in a tight consolidation, with $40 serving as support and $45 as resistence.

Most recently, on Monday of this week, the stock broke above and closed above resistance, marking a potential breakout. Notably, the stock also saw an increase in volume as the daily volume was significantly higher than the average daily volume.

Going forward, if the stock can maintain its position above previous resistance, a breakout on a longer time horizon will be confirmed, and a significant upside ahead of the next earnings report could follow suit. In the short term, a move towards the whole number, $50, could be the obvious target and could serve as a psychological and target number for the stock, with $55 the next potential target zone if the bullish momentum is to continue.

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