AppLovin took a beating today, down 8.21%. As a growth investor, I try to shrug off daily swings, my focus is longer range. Nevertheless, when one of my positions (let alone my largest position) makes a big move, I want to know what’s driving it.
It didn’t take a lot of research to find a Reuters article which is likely to be the primary reason for the outsized movement in the stock price: https://www.reuters.com/business/media-telecom/wpp-media-cuts-2025-global-advertising-revenue-growth-forecast-6-trade-concerns-2025-06-09/.
The article references Meta, Pins, Reddit and Snap, but of course, AppLovin is also a company with their revenue tied to advertising spend.
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I thought the drop was just because people were speculating on the potential SP 500 inclusion, while it did not turn out to happen last Friday.
Luffy
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It’s 100% this. If you look at the stock price, it immediately dumped after-market on Friday after the S&P inclusion did not come through. This is a simple market knee-jerk response based on nothing that will change anything material for the company, and could be a chance to pick up more if you are so inclined.
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CNBC may add context to the price drop with a report regarding a short seller urging S & P not to include Applovin in the index. Letter sent in March by Fuzzy Panda.
AppLovin short-seller urges exclusion of the stock from S&P 500 index.
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Yes, I don’t disagree with that. I should have cited the S&P exclusion as well. I think both factors played a role in this. The difference being exclusion from the S&P has zero impact on their future business potential. A significant reduction in ad spend may dim the future to some extent. Nevertheless, APP remains my largest position. I have no near term plan to sell - but I may trim a bit, it is about 25% of my portfolio, which is a bit outside of my comfort zone.
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Hood wasn’t included in the S&P either and as you can see they dropped almost 8 percent yesterday also. I suspect people really hyped these companies up on being included.
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That’s correct. We saw the very same market behavior during the previous rebalance period. The underlying logic (among those who are building up a position) is that when a company is added to an index such as the s&p500, it results in many index funds having to buy, thus running up the price.
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