AppLovin Stock Slumps On First Day Of Trading

By Sophia kunthara,

Mobile tech company AppLovin’s stock closed at $65.20 on its first day of trading, nearly 19 percent below its IPO price.

The company’s stock opened at $70 on Thursday, around 13 percent below its IPO price of $80. AppLovin raised $2 billion through its IPO and was valued at more than $28 billion before its lackluster debut on Thursday.

AppLovin helps mobile apps grow their business by matching users to apps and helping developers monetize their apps.

President and CFO of AppLovin, Herald Chen, dismissed the stock’s performance on Thursday, saying the company is focused on its long-term value, rather than just its first day.

“We’re focused on creating equity value for the long term, not just the near-term trading,” Chen said in an interview with Crunchbase News.

AppLovin is an interesting venture-backed company to go public, because it didn’t start out that way. The company, which was founded in 2011, initially wasn’t able to raise venture dollars, so it bootstrapped, according to a letter in the S-1 from CEO Adam Foroughi.

The company eventually raised a seed round in 2014 before bringing on investors including KKR.

AppLovin was supposed to be acquired by Chinese private equity firm Orient Hontai Capital for $1.4 billion in 2016, but the deal didn’t materialize. Orient Hontai Capital then became an investor.

The company chose to go public now because of the growth it’s seen in the past year, and the large market it could tap into, Chen said. AppLovin reported around $1.45 billion in revenue in 2020, up from $994.1 million in 2019, according to the company’s S-1. The company opted to go public through a traditional IPO rather than a SPAC or direct listing because an IPO would give it access to the right investors and the time frame was advantageous, Chen said.

With technology that straddles the world of software and video game development, AppLovin is among a handful of gaming-related companies that have gone public in recent months, including Playtika, Roblox and Unity Technologies. But while AppLovin is known for gaming, its technology is “horizontal in nature,” according to Chen, so the company can expand into other areas.

“We think we can continue to use our software, really what we do fundamentally is to get app developers to match with users,” Chen said.

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