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Shares of AppLovin (NASDAQ:APP) are down almost 7% in premarket trading Thursday after the Q2 results showed the company continues to grapple with weak consumer and advertising spending.
The mobile technology company reported a Q2 loss per share of 6c, much worse than the analyst estimate of $0.15. Revenue came in at $776.2 million, missing the consensus estimates of $830.7 million.
Looking ahead, AppLovin expects full-year revenue from $2.84 billion to $3.14 billion, again lower than the consensus of 3.29 billion. Full-year software platform revenue is expected to be between $1.14 billion and $1.29 billion and FY apps revenue between $1.70 billion and $1.85 billion. APP reiterated its FY adjusted EBITDA midpoint forecast of $1.2 billion.
“The mobile app industry is facing several headwinds. While overall consumption of mobile gaming apps remains stable, consumer spending is down compared to last year,” the company said in a shareholder letter.
“Increasing macroeconomic uncertainty over the past quarter compounded these headwinds, resulting in further softening of the mobile gaming market.”
A BofA analyst sees growing risks, but also an attractive valuation.
“Downside risk on the stock has increased slightly vs. our prior view due to macroeconomic factors,” he told clients in a note.
A BTIG analyst cut the price target to $53 from $60 to reflect tempered software outlook.
“Despite fundamental bumps and potential deal-related hiccups, APP remains a highly profitable, rapidly scaling mobile in-app operation focused on driving bigger lifts in accuracy/budget. Following Tuesday’s NBO, it would not surprise us if other strategic options emerge for APP,” the analyst wrote in a client note.
