Chase Coleman Boosts AppLovin Amid Short Seller Concerns

Investor Chase Coleman takes a significant position in AppLovin, showing confidence despite recent bearish reports. This may counteract the negative sentiment from short sellers and indicate potential for growth.

Date: 18-05-2025

AI Rating: 7

Professional Insights on AppLovin
AppLovin has recently made headlines due to the notable investment by billionaire Chase Coleman, with nearly $575 million allocated to the company's stock. This investment accounts for 1.7% of his portfolio, representing a bullish stance amid various short seller reports expressing skepticism about the firm's future.

**Earnings and Revenue Growth Concerns**
The report indicates substantial revenue growth for AppLovin. For instance, they reported revenue growth of 40% in the first quarter, amounting to $1.48 billion, and advertising revenue surged by 70%. Such robust growth signals solid performance and a competitive edge in the advertising market. Furthermore, projections suggest future revenue growth rates for gaming customers settling between 20% and 30%, which can instill confidence in investors looking for medium-term opportunities.

**Profit Margins**
AppLovin has seen a meaningful improvement in its gross margins, which rose from 55.4% in 2022 to 75.2% in 2024. Continued improvement in gross margins to 81.7% in Q1 2023 supports the argument for increased profitability and may appeal to investors seeking companies with strong profit potential. The upward trend in profit margins is encouraging, especially as the firm diversifies its application beyond gaming into e-commerce, potentially enhancing overall margins further.

**Market Dynamics**
Notably, AppLovin appears to be gaining traction at the expense of competitors like Unity Software, which faced a decline in revenue in both 2024 and Q1 2025. Taking market share from rivals indicates AppLovin's strategic positioning and could intensely impact its long-term valuation positively.

**Valuation Perspective**
Despite the excellent financial performance, the forward price-to-earnings (P/E) ratio of under 45 times and a PEG ratio of 0.56 suggest that AppLovin's stock might still be undervalued, making it an attractive option for growth investors. While the bear reports raise valid concerns, Coleman's confidence may help stabilize investor sentiment.
In summary, while certain risks remain, especially from short sellers and the potential implications of allegations regarding Axon 2's technology, AppLovin appears well-positioned for continued growth and should be evaluated seriously by professional investors.

Stocks: APP