In his latest segment on CNBC, Jim Cramer discussed the performance of AppLovin (APP), a stock that has soared by an astonishing 762% year-over-year, culminating in a market valuation of $114 billion. Cramer expressed skepticism about the stock’s current valuation, suggesting that AppLovin might be “incredibly overvalued.” Despite his reservations, he acknowledged the difficulty in betting against the stock due to the high number of investors already shorting it.
Cramer highlighted that AppLovin’s core business revolves around mobile game ad placements, an area he believes is vulnerable to new entrants. He noted that while AppLovin claims to be deeply entrenched in the market, the sector’s barriers to entry are not as high as one might think. According to Cramer, if a new player were to enter with a competitive offering at a lower price, it could potentially disrupt AppLovin’s market position significantly.
He emphasized the company’s high profit margins but questioned their sustainability in the face of potential competition. Cramer pointed out that AppLovin has demonstrated earnings, potentially up to $3.50 per share, but he remains cautious. He reflected on the stock’s dramatic journey from starting the year at $39 to ending at $323, suggesting that such a meteoric rise warrants a second look before making any investment decisions. His advice to investors was to be wary and consider the stock’s trajectory carefully, especially given its price volatility and the inherent risks in the mobile advertising space.
Price Action: At last check, APP shares were trading at $330.67, reflecting an increase of $6.84 or 2.11%. The stock’s price has fluctuated throughout the day, reaching a low of $316.25 and a high of $336.56. Over the past year, APP has experienced a wide trading range, with a 52-week low of $37.40 and a 52-week high of $417.64.
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