This Stock More Than Doubled In 2025. Can It Keep Soaring?

Core Insights - AppLovin has shown significant growth in 2025, with a stock price increase of 120% year to date, driven by impressive revenue and profit figures [1][2] Financial Performance - In Q3 2025, AppLovin's revenue rose 68% year over year to over $1.4 billion, while adjusted EBITDA increased by 79% to $1.12 billion [4] - For the trailing nine months ending September 30, total revenue reached approximately $3.8 billion, a 72% increase year over year, with net income exceeding $2.2 billion, up 128% year over year [5] - Adjusted EBITDA for the same period rose 90% year over year to $3.1 billion [5] Growth Trends - Although Q3 revenue growth of 68% was strong, it represented a deceleration from the 77% growth seen in Q2 [6] - AppLovin's management anticipates further deceleration in Q4, guiding for revenue between $1.57 billion and $1.60 billion, implying a year-over-year growth of 57% to 60% [8] Valuation Concerns - AppLovin's current price-to-sales ratio is approximately 40, and the price-to-earnings ratio is around 50, indicating high investor expectations for continued strong growth [7] - The high valuation raises concerns about the margin for error, especially in light of potential macroeconomic challenges and technological changes affecting the advertising sector [9] Strategic Initiatives - The company is focusing on enhancing capabilities for self-service advertisers, which could support sustained growth, although it may take time for these initiatives to significantly impact performance [8][9] - CEO Adam Foroughi noted a 50% week-over-week growth in spending from self-service advertisers, indicating potential for future success [9]