AppLovin Stock Drops After S&P 500 Snub. Where Shares Are Heading Next.

AppLovin stock missed out on joining the S&P 500 again. (Dreamstime)

Investors hoping for AppLovin’s long-awaited inclusion in the S&P 500 will have to wait, again. While two of its software peers, Datadog and Trade Desk got the nod so far in July, AppLovin was shunned.

Based on relative strength, Datadog’s inclusion on July 9 makes sense. The stock has essentially doubled off its early April Liberation Day lows and has since filled the 15% gap sparked by its July 3 breakout. But Trade Desk’s selection after the close on July 14 is more puzzling. Despite a booming broader market, the stock remains under pressure, off nearly half from its Dec. 4 high, struggling to regain its footing while others sprint ahead.

AppLovin shareholders shouldn’t let the latest S&P 500 snub sour the outlook, even if the stock is down 2% in Tuesday trading. The stock is still up over 300% over the past year, and the chart suggests it may just be catching its breath before another move higher. Over the past month, AppLovin has been carving out a solid base, appearing ready to climb toward a double bottom with handle formation, with a pivot just below $430. There’s still some technical ground to cover, and the disappointment from being passed over may linger short term. But as long as the stock holds above its recent consolidation range, the bullish setup remains intact. Stay long if the lows in the current box holds.

There’s even a compelling technical case for a fresh entry in AppLovin. The stock remains just above its prior double bottom breakout point at $352.10, marked by the intraday high from the March 25 session. Retests of breakout levels are common, and often healthy, and that’s exactly what’s unfolding here, giving sidelined investors another opportunity to engage. Round-number theory has played a clear role, with shares rejected at $500 in February and a textbook rebound off the $200 level in April. While the recent exclusion from the S&P 500 may sting briefly, the setup remains constructive. A near-term challenge of the $400 level looks likely, with a potential move back toward the former highs near $500 on the table for the fourth quarter.

The chart is writing a better future than the present suggests.

Write to Doug Busch at douglas.busch@barrons.com