Insider Decision: Herald Chen Offloads $59.41M Worth Of AppLovin Stock

Herald Chen, President & CFO at AppLovin APP, executed a substantial insider sell on December 11, according to an SEC filing.

What Happened: Chen's decision to sell 171,951 shares of AppLovin was revealed in a Form 4 filing with the U.S. Securities and Exchange Commission on Wednesday. The total value of the sale is $59,411,675.

In the Wednesday's morning session, AppLovin's shares are currently trading at $318.46, experiencing a down of 0.81%.

Get to Know AppLovin Better

AppLovin Corp is a mobile app technology company. It focuses on growing the mobile app ecosystem by enabling the success of mobile app developers. The company's software solutions provide tools for mobile app developers to grow their businesses by automating and optimizing the marketing and monetization of their applications.

Understanding the Numbers: AppLovin's Finances

Revenue Growth: Over the 3 months period, AppLovin showcased positive performance, achieving a revenue growth rate of 38.64% as of 30 September, 2024. This reflects a substantial increase in the company's top-line earnings. When compared to others in the Information Technology sector, the company excelled with a growth rate higher than the average among peers.

Insights into Profitability:

• Gross Margin: With a high gross margin of 77.5%, the company demonstrates effective cost control and strong profitability relative to its peers.

• Earnings per Share (EPS): AppLovin's EPS is below the industry average, signaling challenges in bottom-line performance with a current EPS of 1.29.

Debt Management: AppLovin's debt-to-equity ratio stands notably higher than the industry average, reaching 3.74. This indicates a heavier reliance on borrowed funds, raising concerns about financial leverage.

Valuation Overview:

• Price to Earnings (P/E) Ratio: AppLovin's current Price to Earnings (P/E) ratio of 97.59 is higher than the industry average, indicating that the stock may be overvalued according to market sentiment.

• Price to Sales (P/S) Ratio: With a higher-than-average P/S ratio of 26.02, AppLovin's stock is perceived as being overvalued in the market, particularly in relation to sales performance.

• EV/EBITDA Analysis (Enterprise Value to its Earnings Before Interest, Taxes, Depreciation & Amortization): The company's EV/EBITDA ratio 56.03 is below the industry average, indicating that it may be relatively undervalued compared to peers.

Market Capitalization Highlights: Above the industry average, the company's market capitalization signifies a significant scale, indicating strong confidence and market prominence.

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Uncovering the Importance of Insider Activity

While insider transactions should not be the sole basis for making investment decisions, they can play a significant role in an investor's decision-making process.

When discussing legal matters, the term "insider" refers to any officer, director, or beneficial owner holding more than ten percent of a company's equity securities, as stipulated in Section 12 of the Securities Exchange Act of 1934. This includes executives in the c-suite and significant hedge funds. Such insiders are required to report their transactions through a Form 4 filing, which must be completed within two business days of the transaction.

A new purchase by a company insider is a indication that they anticipate the stock will rise.

On the other hand, insider sells may not necessarily indicate a bearish view and can be motivated by various factors.

Understanding Crucial Transaction Codes

Taking a closer look at transactions, investors often prioritize those unfolding in the open market, meticulously cataloged in Table I of the Form 4 filing. A P in Box 3 denotes a purchase, while S signifies a sale. Transaction code C denotes the conversion of an option, and transaction code A signifies a grant, award, or other acquisition of securities from the company.

Check Out The Full List Of AppLovin's Insider Trades.

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This article was generated by Benzinga's automated content engine and reviewed by an editor.