1. AppLovin Corporation (NASDAQ:APP)
Number of Hedge Fund Holders as of Q4: 95
Jericho Capital Asset Management’s Equity Stake: $904.70 Million
AppLovin Corporation (NASDAQ:APP), a leading mobile technology company based in Palo Alto, California, specializes in helping developers market, monetize, and analyze their apps through platforms like MAX, AppDiscovery, and SparkLabs. In its financial results for the fourth quarter and full year ending December 31, 2024, the company reported impressive growth. Q4 revenue surged 44% year-over-year to $1.37 billion, while net income skyrocketed 248% to $599.2 million. For the full year 2024, total revenue reached $4.71 billion, marking a 43% increase from 2023, with net income soaring 343% to $1.58 billion.
AppLovin Corporation (NASDAQ:APP)’s advertising business was the primary driver of this growth, with Q4 advertising revenue jumping 73% year-over-year to $999.5 million. Full-year advertising revenue increased by 75%, reflecting AppLovin’s success in expanding its marketing platform. However, the apps revenue segment experienced a slight 1% decline in Q4 2024, though it still managed a 3% annual increase. The company remains focused on strengthening its core advertising business, which now accounts for the majority of its revenue.
AppLovin Corporation (NASDAQ:APP) also executed significant shareholder returns, retiring and withholding 1.6 million shares in Q4 and 25.7 million shares over the full year, totaling $2.1 billion in buybacks. Additionally, the company generated strong cash flow, with $701 million in net cash from operating activities in Q4 and $2.1 billion for the year. Free cash flow mirrored these figures, demonstrating financial stability and effective capital allocation.
Looking ahead, AppLovin Corporation (NASDAQ:APP) has set optimistic guidance for the first quarter of 2025, forecasting revenue between $1.355 billion and $1.385 billion. Advertising revenue is expected to range from $1.03 billion to $1.05 billion, while apps revenue is projected between $325 million and $335 million. The company also anticipates an adjusted EBITDA of $855 million to $885 million, with a robust margin of 63% to 64%. With continued investment in its advertising ecosystem and strategic initiatives, AppLovin is well-positioned for further growth in the mobile technology sector.
ClearBridge Mid Cap Strategy stated the following regarding AppLovin Corporation (NASDAQ:APP) in its Q4 2024 investor letter:
“Stock selection in IT was the greatest contributor to performance on strength in AppLovin Corporation (NASDAQ:APP) and Marvell. AppLovin is the world’s leading mobile game and app advertising platform, providing software for marketing and monetization, powered by its proprietary AI targeting engine Axon. We see opportunity for AppLovin to continue to expand and grow its share of the market for mobile app marketing at a time when mobile gaming ad spend is recovering from a higher-rate-driven trough. We also see the potential for the company to expand its addressable market to include e-commerce advertising, around which initial forays have been encouraging. With strong incremental margins and management keeping expenses controlled, the company should be able to drive significant free cash flow growth as revenue continues to scale.”
Overall, AppLovin Corporation (NASDAQ:APP) ranks first on our list of top 10 stocks to buy according to Jericho Capital Asset Management. While we acknowledge the potential for APP as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than APP but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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