AppLovin shares drop on Bank of America downgrade

AppLovin shares drop on Bank of America downgrade

Tue, August 11, 2026 at 8:35 PM GMT+3 2 min read

• APP -4.68%

AppLovin Corp (NASDAQ:APP) shares fell 5% to $321 after Bank of America downgraded the stock to Neutral, citing greater uncertainty around the company's ability to sustain its long-term 30% revenue growth trajectory.

Bank of America said AppLovin's second quarter results raised questions about a previously assumed source of baseline sequential growth. The firm said engineer-directed improvements to the company's gaming models appeared to be the primary driver of quarterly growth, while it was less clear whether the 3% to 5% sequential growth from self-learning remained applicable.

The firm said the future trajectory of self-learning was not explicitly addressed in AppLovin's recent earnings report or third-quarter guidance. Given what it estimates is AppLovin's roughly two-times market share relative to its next-largest competitor, Bank of America said 3% sequential growth from self-learning alone may no longer apply over the long term.

Bank of America also said AppLovin's next wave of innovation requires more evidence before it can support the company's 30% long-term annual revenue growth target. Management has outlined plans to train larger and more complex recommender system models, which it believes could generate larger gains over time by benefiting from scaling effects similar to those seen in large language models.

While Bank of America described AppLovin as a technology leader that has out-innovated Google and Meta in the in-app bidding market, it said there was not yet enough evidence to assess the magnitude or durability of potential gains from the larger recommender models.

As a result, Bank of America lowered its 2027 revenue growth forecast to 23% from 31% and reduced its 2027 EBITDA estimate to $8.3 billion from $9 billion.

The firm also lowered its third quarter model to the midpoint of AppLovin's guidance range from the high end and reduced its 2027 Consumer revenue forecast to $2 billion from $2.3 billion.

Bank of America lowered its price objective to $400 from $430, based on a 16-times multiple of estimated 2027 EBITDA. It kept the valuation multiple unchanged, saying it expects limited downside to its estimates and does not anticipate AppLovin losing significant market share.

The firm said the debate around AppLovin is increasingly likely to center on the company's maturity. Without another innovation cycle, Bank of America said AppLovin could increasingly be viewed as a mature adtech platform, with its valuation moving closer to that of established, scaled online advertising companies.