Core Viewpoint - AppLovin's strong financial performance in Q3 is overshadowed by an ongoing SEC investigation into its data collection practices, which may impact its stock performance and future growth potential [1][3][9]. Financial Performance - AppLovin reported a 68% year-over-year revenue increase to $1.41 billion, exceeding analysts' expectations by $70 million [1]. - Adjusted EBITDA rose 90% to $1.16 billion, while earnings per share (EPS) increased 96% to $2.45, surpassing consensus forecasts by $0.06 [1]. - The company anticipates a sequential revenue growth of 12% to 14% in Q4, with adjusted EBITDA expected to rise by 11% to 14% [2]. Business Evolution - Originally a mobile game publisher, AppLovin expanded into digital advertising by acquiring MoPub and Wurl in 2022 and launching the AI-powered Axon ad discovery platform in 2023 [4][5]. - The company has diversified its advertising ecosystem into non-gaming markets and introduced a self-service platform for advertisers [5]. SEC Investigation - The SEC is investigating AppLovin's data collection practices, with allegations of violating app store policies by improperly accessing user IDs from other apps [8]. - AppLovin has denied these allegations, but the investigation has already affected its stock performance and could have long-term implications for its business [9]. Future Growth Expectations - Analysts project a compound annual growth rate (CAGR) of 27% for revenue and 42% for adjusted EBITDA from 2024 to 2027, primarily driven by Axon's AI-powered advertising solutions [10]. - AppLovin's current valuations are based on expectations of growth from its AI-driven adtech platform, trading at 28 times next year's revenue and 34 times adjusted EBITDA [11]. Insider Sentiment - Recent insider trading indicates a negative sentiment, with insiders selling more than four times as many shares in the past three months compared to previous periods, suggesting potential pressure on the stock [12].