The stock market is always full of surprises, and right now, there’s a lot of buzz around AppLovin.
But is it too risky for individual investors to jump in? Let’s break it down and see what makes this tech company stand out—and whether it’s a smart move to buy in right now.
AppLovin’s Unstoppable Rise
If you’re familiar with tech stocks, you know how fast things can change.
But even so, AppLovin’s performance over the past year has been eye-popping.
Despite being a relatively unknown name in the UK, this software company has seen a massive 713% increase in its share price, blowing away bigger names like Nvidia and Palantir.
As of now, AppLovin is valued at an impressive $139 billion, making it one of the most valuable companies in the tech world.
In fact, if AppLovin were on the London stock exchange, it would rank as the fourth-largest company in the FTSE 100—outpacing major players like Unilever and BP.
But how did they get here, and what exactly do they do?
A Vision Turned Into Reality
AppLovin was founded in 2011 by Adam Foroughi, a former derivatives trader from Tehran.
Starting with just $4 million in funding from family and angel investors, Foroughi had a vision: to connect advertisers with mobile game developers.
The idea was to help game creators earn money through targeted ads on their apps.
It was a tough sell at first—mobile gaming was still a new trend, and figuring out how to advertise effectively was challenging.
The game-changer came in 2018 when investment firm KKR injected $400 million into the company.
This deal valued AppLovin at $2 billion and gave them the cash to expand aggressively.
They began acquiring mobile game studios and created hundreds of games.
Fast forward to 2021, and AppLovin went public, riding the wave of the pandemic-fueled gaming boom.
But the real magic started happening when they integrated artificial intelligence (AI) into their ad system.
Leveraging AI for Success
AppLovin’s breakthrough came in 2023 with the launch of Axon, a powerful ad search engine that competes with giants like Google.
Axon uses machine learning to place targeted ads within mobile games—whether they’re made by AppLovin or third-party studios.
This innovation has pushed the company’s reach to over 1.4 billion active daily users—just shy of Meta’s 3.4 billion.
And their latest numbers are nothing short of stellar: in 2024, revenue jumped by 43%, and net profits quadrupled.
One of the big reasons for AppLovin’s success is its ability to monetize its massive user base.
The advertising unit alone saw sales soar by 75%, bringing in $3.2 billion.
Now, AppLovin is expanding its AI-driven ad services beyond gaming and into e-commerce, eyeing potential partners like Amazon and Walmart.
As Adam Foroughi puts it, “This is just the beginning.”
Is AppLovin a Good Investment?
So, with all that success, should you jump in? The short answer is: it’s complicated.
On the one hand, AppLovin has a solid track record, and its innovative use of AI in advertising makes it a very interesting player in the tech world.
Analysts have even raised their share price target, with Bank of America forecasting a price of $580—up from the current $415.
But, as with any tech stock, there are risks. The price could always drop, and as a US-based company, there’s also the risk of currency fluctuations if you’re investing from the UK.
Plus, tech stocks can be volatile, and investing in them requires a certain level of stomach for risk.
Should You Buy In?
If you’re interested in AppLovin but not ready to go all-in, there’s an option to reduce your risk.
You could invest through a UK-based fund that holds shares in the company.
Funds like Baillie Gifford’s Worldwide Long Term Global Growth fund have taken a significant stake in AppLovin, betting that the stock still has room to rise.
For those who want to go the DIY route, investing in individual shares is an option.
However, keep in mind that investing directly in US shares will require some additional paperwork, like the W-8BEN form for tax purposes.
If you’re unsure about where to start, there are plenty of online investment platforms that can help you compare fees and investment options.
The Verdict: Is It Worth the Risk?
While AppLovin’s incredible growth makes it tempting for investors, it’s important to remember that no investment is without risk.
The company is riding high right now, but tech stocks are always unpredictable.
Whether you decide to take the plunge depends on your risk tolerance and whether you believe AppLovin’s AI-driven ad platform will continue to grow.
In the end, if you’re unsure, it might be worth consulting with a financial advisor or starting small through a diversified fund.
Whatever you decide, make sure you’ve done your homework and are ready for the ups and downs of the stock market!