AppLovin stock fell sharply on Monday after the company was not included in the S&P 500 during the index’s quarterly rebalancing. The stock tumbled nearly 15% on the news, closing at $342.54. “The biggest momentum name in the market is having its worst day in months after not being included in the S&P 500,” said Daniel O’Regan, managing director of equity trading at Mizuho Securities, in an intraday client note on Monday.
Instead of AppLovin, the S&P 500 added Apollo Global Management in its latest reshuffling. Following the announcement, AppLovin stock dropped 14.7% from its record high of $417.64, reached just last Friday. Despite this setback, the stock had climbed 908% for the year by Friday’s close.
Other market movements also caught attention on Monday. Workday saw a 5.1% increase, closing at $279.91, while Apollo initially spiked 6.5% to an all-time high of $189.41 in morning trading but later ended the session down 3% to $172.47. AppLovin’s software platform enables app developers to market, monetize, and analyze their apps.
The Palo Alto, Calif.-based company also produces mobile games such as “Wordscapes,” “Matchington Mansion,” and “Game of War.” AppLovin is currently featured on two IBD stock lists. The stock market took a downturn on Monday as the Nasdaq Composite reversed its morning gains, closing the day with a 0.6% decline. This shift followed three straight weekly gains, with the Nasdaq hitting an all-time high of 19,872 earlier in the session before retreating.
Market analysts suggest that this pullback was highly probable, given the recent high valuations and continuous upward trend that the market has seen.
AppLovin sees sharp decline post-S&P exclusion
Investors seemed to take the opportunity to lock in profits, contributing to the day’s declines.
As the market adjusts, investors are reminded to stay informed and consider the broader market trends when making investment decisions. AppLovin’s shares are very volatile and have had 28 moves greater than 5% over the last year. But moves this big are rare even for AppLovin and indicate this news significantly impacted the market’s perception of the business.
The biggest move happened about a month ago when the stock gained 51.7% after the company reported a classic “beat and raise” quarter as efforts to optimize its AI-powered advertising platform seemed to be yielding results. AppLovin beat analysts’ revenue, EBITDA, and EPS expectations this quarter. Looking ahead, Q4 guidance was also very encouraging, with revenue and EBITDA guidance coming in strong.
In addition, the company reiterated long-term guidance of sustaining 20-30% annual growth, showing management’s strong conviction in the growth strategy. Notably, AppLovin announced plans to diversify beyond the gaming audience by expanding into new verticals such as e-commerce. AppLovin is up 783% since the beginning of the year.
At $342.60 per share, it is still trading 14.7% below its 52-week high of $401.50 from December 2024. Investors who bought $1,000 worth of AppLovin’s shares at the IPO in April 2021 would now be looking at an investment worth $5,255. In summary, while AppLovin’s recent exclusion from the S&P 500 Index caused a significant drop in its stock price, the company’s strong performance and future growth potential indicate that this dip might be an opportunity for investors.
