Key Points
AppLovin reported Q4 2025 financial results after the market closed today.
The company surpassed analysts' revenue and profit expectations.
Shares are trading at a premium to their historic valuation.
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Extending the 3.4% decline it endured during today's regular market hours, AppLovin (NASDAQ: APP) stock is sinking this evening. Investors are digesting the mobile marketing platform provider's fourth-quarter 2025 financial results, released after the bell, and it's clear they're not loving the report.
As of 5:22 p.m., AppLovin stock is down 7.5% from its closing price of $456.81 during today's regular market session.
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Beating analysts' expectations isn't enough to quell investors' concerns
Reporting Q4 2025 revenue of $1.66 billion (a 66% year-over-year increase) and diluted earnings per share (EPS) of $3.24 (an 87% year-over-year increase), AppLovin posted better results than the $1.61 billion in sales and EPS of $2.94 that analysts had anticipated.
With respect to cash flow, AppLovin generated free cash flow of $1.31 billion, compared with $695.2 million in the same period in 2024.
For the first quarter of 2026, AppLovin projects revenue of $1.745 billion to $1.775 billion. Should it achieve the midpoint of this guidance, it will represent year-over-year sales growth of 18.6%. In terms of profitability, AppLovin projects Q1 2026 adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) of $1.465 billion to $1.495 billion. If it reports the midpoint of this range, it will mean the company will have grown adjusted EBITDA by 47.3%.
Investors don't have an appetite for AppLovin's rich stock valuation
AppLovin's stock has been climbing in the days leading up to the company's Q4 2025 financial results. Over the past five days, shares have been up nearly 12%. With the company reporting a strong Q4 2025, investors feel the stock has gotten ahead of itself, and the company's Q1 2026 forecast doesn't support the current level. Shares are trading at 45.9 times operating cash flow, a steep premium to their five-year average operating cash flow valuation of 19.7.
Fortunately, for those seeking adtech exposure but who are wary of AppLovin's valuation right now, there are plenty of other adtech stocks to consider.
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Scott Levine has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
