Shares of AppLovin (NASDAQ: APP), the volatile adtech stock, gained today after the company upgraded its share buyback program in a filing after hours on Friday.
As of 11:06 a.m. ET, the stock was up 4.8% on the news.
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AppLovin increases share buybacks
AppLovin, whose shares have fallen roughly 35% since their post-earnings pop a few weeks ago, said that it would amend its share buyback program, which currently has $1.77 billion available for repurchase.
Previously, the amount AppLovin could repurchase in a quarter was limited to the amount of the company's free cash flow in the preceding fiscal quarter. The filing says the company may now repurchase $500 million immediately, and it will also be able in future quarters to repurchase $500 million plus the amount of free cash flow generated in the preceding fiscal quarter, up to the existing repurchase maximum amount, which is $1.77 billion.
AppLovin was also named to Benchmark's "EDM [Enterprise Data Management] Top Ideas List" due to its ramp-up of e-commerce revenue and new self-service tools that can drive additional revenue. Analyst Mike Hickey also credited the new buyback program and gave the stock a buy rating and a price target of $525.
Is AppLovin stock cheap?
The buyback announcement comes as the stock tumbles due to valuation and macro concerns following its post-earnings pop and after a number of attacks from short sellers.
The move seems designed to signal to the market that management thinks the stock is on sale now. While AppLovin is still expensive by traditional metrics, trading at a price-to-sales ratio of 24, the company is putting up impressive growth with advertising revenue up 73% in the fourth quarter.
If it can maintain that momentum, the stock should be a winner from here.
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Jeremy Bowman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends AppLovin. 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.
