AppLovin Stock Gains 13% After Earnings. Why That’s Not a Big Deal.

The digital advertising company reported solid second quarter earnings. (Timon Schneider / Dreamstime)

For most companies, a double-digit share-price jump after earnings would be something to celebrate. For AppLovin, it’s just another day at the office.

Shares of the digital advertising company were rising 13% on Thursday, the first trading session after its solid second-quarter earnings print.

The company beat Wall Street’s consensus estimates for earnings and revenue, and management’s guidance for the third quarter also exceeded expectations.

Shareholders should be accustomed to the post-earnings whiplash at this point. AppLovin is one of the most volatile stocks on the market, and Thursday’s 13% jump was a mild reaction by historical standards.

Over the past 12 months, AppLovin stock has a beta—a common measure of volatility—of 3.7 relative to the Russell 1000 index, according Dow Jones Market Data. That’s the highest figure in the index, ahead of other volatile stocks such as Super Micro Computer, Robinhood Markets, and Coinbase Global.

But earnings season is when AppLovin investors truly need to strap in.

Entering Thursday, the stock had swung by double-digit percentages in the first trading day after 13 of its past 14 earnings reports, according to FactSet.

In fact, Thursday’s spike was rather tame. In that same 14-quarter period, shares have moved an average of roughly 21% up or down, including a 46% jump on Nov. 7 last year after the company’s third-quarter earnings beat.

All that said, it’s difficult to imagine many shareholders are disappointed by the measly 13% gain. AppLovin shares have climbed 38% this year and 481% over the past 12 months, as the company’s market capitalization has swelled to more than $132 billion.

Given AppLovin’s meteoric rise, we may we may have to start comparing the stock to a whole new universe of peers. The company is a candidate to join the S&P 500 if Paramount Global loses its place following its Aug. 7 merger with Skydance Media. Should that happen, don’t be surprised to see another wild swing in AppLovin’s share price.

Write to Nate Wolf at nate.wolf@barrons.com