Why AppLovin Stock Skidded to a Nearly 9% Loss Today
Key Points
An insider geared up to sell nearly 29,000 shares.
The same day, an analyst reduced his price target on the stock.
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A pending insider stock sale and an analyst's assertive price target cut was the combination helping to drive down the value of AppLovin (NASDAQ: APP) on Tuesday. The company saw its stock price erode by nearly 9% on a trading day in which the S&P 500 index edged into positive territory with a 0.2% rise.
Share sale
The insider is entrepreneur and company executive Eduardo Vivas, who was an early-stage AppLovin investor and currently serves on its board of directors. In a regulatory filing published Monday afternoon, Vivas disclosed that he intended to sell a total of 28,655 of the company's publicly traded class A common shares.
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Image source: Getty Images.
That isn't a massive amount when compared to AppLovin's outstanding share tally of 307.6 million. However, investors tend to notice (and, often, worry) when a notable insider makes such a divestment.
Adding to the caution was that price target cut, which came from analyst Jason Bazinet of prominent bank Citigroup. Bazinet reduced his fair value assessment on AppLovin to $820 per share, some distance down from his previous price target of $850. This doesn't, however, make him a bear, as he maintained his buy recommendation on the shares.
An estimates-topping third quarter
Bullishness was in the air last week after AppLovin published its third-quarter results. It posted strong growth on both the top and bottom lines, and beat the average analyst estimates for both metrics. Given that, Tuesday's flop feels rather unjustified for this still rather promising company.
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Citigroup is an advertising partner of Motley Fool Money. Eric Volkman 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.
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