A financial report has broken investors' hearts! AppLovin (APP.US) plummeted 20% after its earnings report, hitting a new low in over a year, and Wall Street collectively "cut target prices."

Mobile advertising and application technology company AppLovin (APP.US) saw its shares plummet about 20% on Thursday, hitting the lowest level since July 2025, due to its second-quarter revenue, which unexpectedly fell short of market expectations. This triggered multiple analysts to downgrade the stock's rating and reduce target prices. Matthew Swanson, an analyst at RBC Capital Markets, stated in an investor report on Thursday, By AppLovin's own standards, this quarter's performance was weak, with revenue and earnings both below the midpoint of guidance and market consensus expectations. Specifically, revenue was $1.924 billion, a year-on-year increase of 53%, but 0.9% lower than market expectations, and up 3.8% quarter-on-quarter. In terms of profit, adjusted EBITDA was $1.613 billion, with a profit margin of 83.9%, and free cash flow was $863 million, all below market expectations. The quarters results were primarily pressured by soft gaming business performance and slower-than-expected meaningful model improvements. RBC maintained an "Outperform" rating but lowered its target price from $700 to $575. Needham kept a "Buy" rating but also reduced its target price from $700 to $500. Needham analyst Bernie McTernan noted in a report, Overall, our core assessment of AppLovin stock remains unchanged, as we still believe it has significant growth potential. However, three issues revealed by this earnings reporteach of which is not severe on its ownmay cause investor concerns in the short term: failure to reach the upper limit of the performance guidance for the second quarter, delays in the launch of new consumer advertising tools, and consumer advertising revenue slightly below our second-quarter expectations. That said, we believe the targets set by AppLovin for the third quarter are achievable, and the boost from the year-end holiday consumption peak should be sufficient to help regain its valuation premium. Wells Fargo & Company downgraded its rating on the stock from "Overweight" to "Equal Weight," and significantly slashed its target price from $575 to $357. Wells Fargo & Company analyst Alec Blando stated, We believe AppLovin's share of spending in the mobile gaming sector has become saturated, and future growth will increasingly rely on improving monetization rates. Currently, AppLovin accounts for 50% of mobile gaming user acquisition spending, seemingly nearing its share ceiling. Therefore, future growth in the mobile gaming business will largely depend on overall market expansion and further improvements in monetization rates. We believe these growth drivers may only achieve lower multiples in terms of valuation compared to the logic of share growth. Additionally, Piper Sandler downgraded AppLovin from "Overweight" to "Neutral," nearly halving its target price from $665 to $385. Deutsche Bank Aktiengesellschaft cut its target price from $660 to $580, Raymond James from $640 to $590, and Evercore ISI from $750 to $630. In contrast, AppLovin's competitor Unity Software (U.US) rose over 15% on Thursday after announcing its second-quarter earnings.