AppLovin (APP) Stock Drops Despite Bullish Calls from Morgan Stanley and Evercore

TLDR

• AppLovin stock dropped 6.3% on Friday, closing at $568.76, ahead of the Martin Luther King Jr. holiday weekend
• Morgan Stanley raised its price target to $800 from $750 with an Overweight rating, while Evercore ISI initiated coverage with an Outperform rating and $835 target
• The company will report Q4 and full-year 2025 earnings after market close on February 11
• Director Maynard G. Webb Jr. received 28 restricted stock units on January 15 that vested immediately
• The SEC is investigating AppLovin’s data-collection practices following short-seller allegations about targeted ad delivery

AppLovin Corporation shares closed at $568.76 on Friday, down 6.3% for the session. The stock fluctuated between $560.05 and $615.98 during trading. Around 8.6 million shares changed hands throughout the day.

AppLovin Corporation, APP

The decline happened despite two major Wall Street firms issuing bullish calls on the stock this week. Morgan Stanley lifted its price target to $800 from $750 on January 13. The firm maintained its Overweight rating on AppLovin shares.

Morgan Stanley believes 2026 will mirror 2025 in the internet sector. The market is expected to favor companies showing positive returns from GenAI or GPU-enabled technologies. Subsectors facing disruption from autonomous vehicles and other emerging technologies will likely trade at lower valuations.

Evercore ISI analyst Robert Coolbrith started coverage on AppLovin one day after Morgan Stanley’s update. He assigned an Outperform rating with an $835 price target. Coolbrith called AppLovin’s ad tech platform for mobile gaming “dominant.”

The analyst projects revenue and EBITDA growth exceeding 30% annually from 2025 through 2028. He highlighted the company’s expanding e-commerce performance channel as a key growth driver.

Wall Street Weighs In Ahead of Earnings

The stock has behaved like a momentum play in recent months. Shares rise quickly on positive news but drop just as fast when broader market sentiment turns negative. Investors have shown limited patience with the name.

Friday’s drop came ahead of a holiday-shortened trading week. U.S. markets remain closed Monday for Martin Luther King Jr. Day. “To finish the week around flat… most investors will take that as a win,” said Anthony Saglimbene from Ameriprise Financial in a Reuters interview.

AppLovin wasn’t alone in Friday’s selloff. Enterprise software stocks dropped earlier in the week as well. Both AppLovin and Unity fell roughly 9% by midday Wednesday. Traders continue rotating out of high-beta software names.

Regulatory Cloud and Upcoming Catalyst

On the regulatory front, the SEC is investigating AppLovin’s data-collection practices. The probe follows short-seller claims about targeted ad delivery and potential violations of platform-partner rules. Reuters first reported the investigation in October. AppLovin has declined to comment on the matter.

A Form 4 filing with the SEC revealed director Maynard G. Webb Jr. received 28 restricted stock units on January 15. The units vested immediately upon grant.

AppLovin will report its Q4 and full-year 2025 earnings on February 11 after markets close. CEO Adam Foroughi and CFO Matthew Stumpf will host a conference call at 5:00 p.m. ET following the release.

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