AppLovin Stock: Here's When To Buy

Why Applovin Stock Flopped

AppLovin's revenue for 2020 was $1.4 billion. It was a 45% increase year over year. Still, the company has not managed to see a profit, with a loss of $125 million.

The company compares to Roblox Corp. (NYSE: RBLX), another recent direct listing. Roblox and AppLovin compete in the mobile game sector, both platforms that offer a selection of games.

However, Roblox stock had an almost inverse performance compared to AppLovin after its IPO. The stock started at around $69, then climbed over $80 in a month.

AppLovin turned in higher revenue for 2020 compared to Roblox's $923 million. It lost about $125 million, only half of Roblox's $253 million loss.

To explain why the Roblox stock price seemed to fare better than AppLovin, look no further than the brand.

Roblox has more name recognition behind an exciting, engaging business model that allows young gamers to participate in building the games themselves in Roblox Studio. It opens a community where people can play and improve each other's games.

As a result, the Roblox library includes over 50 million games. This is the essence of the Roblox business.

Compare that to AppLovin, a company almost perfectly straddled between two revenue streams – the app and the in-game purchases.

An analyst told The Wall Street Journal that the AppLovin IPO may have been priced with more consideration for its software platform than its game apps. The problem, of course, is that the mobile game revenue makes up half the company's revenue.

Now, the question is whether AppLovin can successfully keep a foot in both worlds and still capture its target market.

When Should You Buy AppLovin Stock?

Some analysts argue that the Roblox craze could have been mostly due to the pandemic giving kids more time to play video games. They say a reversal in demand is possible.

But when you consider how mobile gaming is changing, that's just plain crazy.

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Disclaimer: Any performance results described herein are not based on actual trading of securities but are instead based on a hypothetical trading account which entered and exited the suggested ...

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