AppLovin Corporation's stock plummeted 11.53% during intraday trading on Thursday, extending significant pre-market losses. The sharp decline followed the mobile advertising technology company's release of its fourth-quarter financial results, which revealed a revenue miss against market expectations.
The company reported quarterly sales of $1.66 billion, falling short of analysts' average estimate of $1.70 billion. AppLovin faces tepid demand for its advertising services amid intensifying competition in the digital advertising landscape, where companies ranging from Big Tech to emerging platforms are fighting for advertising dollars. Additionally, investors remain jittery about artificial intelligence's potential disruptive impact on AppLovin's business model.
Despite beating earnings per share estimates, the company's revenue outlook for the current quarter indicates a deceleration in growth to approximately 52%, down from the 66% year-over-year increase reported for Q4. Market sentiment was further weighed down by negative spillover from competitor Unity Software's disappointing earnings report, ongoing regulatory scrutiny including an SEC investigation, and some investors taking profits after the stock's 22% gain over the previous five days.