<div id="readability-page-1"><div> <h2>Key Points</h2><ul><li>AppLovin has pushed through the headwind of short-seller reports, but a regulatory probe about its business model is still underway.</li><li>The company continues to deliver exceptional financial results and higher margins.</li><li>AppLovin is gaining ad market share faster than Alphabet and Meta Platforms, and has firmly established itself as a leader in the industry. </li><li>10 stocks we like better than AppLovin ›</li></ul>AppLovin (NASDAQ: APP) is down by roughly 27% year to date, but over the past five years, it has achieved a 687% gain. Do the adtech stock's longer-term returns indicate what lies ahead, or is the recent dip a more meaningful sign of things to come? AppLovin has attracted some short-seller reports, but its fundamentals indicate the company is still growing.<img src="https://imageproxy.pbkrs.com/https://g.foolcdn.com/image//query-dXJsPWh0dHBzOi8vZy5mb29sY2RuLmNvbS9lZGl0b3JpYWwvaW1hZ2VzLzg3MDYxNC9nZXR0eWltYWdlcy0xMzk4Njk3MDQ1LTEyMDB4ODAwLTViMmRmNzkuanBnJnc9NzAw?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" width="700" height="467" original-src="https://imageproxy.pbkrs.com/https://g.foolcdn.com/image//query-dXJsPWh0dHBzOi8vZy5mb29sY2RuLmNvbS9lZGl0b3JpYWwvaW1hZ2VzLzg3MDYxNC9nZXR0eWltYWdlcy0xMzk4Njk3MDQ1LTEyMDB4ODAwLTViMmRmNzkuanBnJnc9NzAw"/>Image source: Getty Images.Will AI create the world's first trillionaire? Our team just released a report on the one little-known company, called an &#34;Indispensable Monopoly&#34; providing the critical technology Nvidia and Intel both need. Continue » <h2>Under fire from short-sellers</h2>AppLovin has been the target of multiple short reports in recent years. CapitalWatch was the latest bear to take aim at it, claiming that AppLovin operated a back-end money-laundering scheme. AppLovin rejected those claims, and its legal team demanded that the short-seller retract the report; it received an apology shortly after. Other short-sellers claimed last year that AppLovin copies data from Meta Platforms (NASDAQ: META) and Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL) for its ad network. That caused a scare, but neither advertising tech giant has taken action on AppLovin related to these claims. The AppLovin team has denied these reports as well, but a Securities and Exchange Commission (SEC) probe of the company remained active in February. If the SEC probe finds that AppLovin's business model revolves around illegal practices, it would undeniably hurt the stock. In the meantime, the company continues to post tremendous revenue growth, including a 59% year-over-year improvement in the first quarter. AppLovin has held onto most of its gains despite the short-seller reports because of its enticing fundamentals. If the SEC probe delivers a verdict that is less impactful than feared, it could trigger another rally for the stock.<h2>AppLovin can compete with the giants while expanding its profit margins</h2>In Q1, AppLovin achieved a net profit margin of 65.4% -- and that wasn't the first time over the past year that it delivered margins above 60%. The adtech company earned almost $2 billion in the quarter. Compare that to the $56.3 billion that Meta Platforms brought in or the $109.9 billion that Alphabet booked, and it's obvious that it's not going to catch up to those companies anytime soon. However, AppLovin is growing faster than both of them. This growth also comes with rising profits as its AI ad engine continues to deliver positive results for businesses.The adtech company's growth hasn't shown signs of slowing, either. AppLovin's Q1 financial update shows positive sequential growth in every quarter starting from Q2 2023. Net income from continuing operations follows the same script. The more AppLovin scales, the more its margins will expand. Its total costs and expenses went up by only 26.2% year over year in Q1. If costs continue to grow minimally while revenue growth remains elevated, the stage will be set for further margin expansions.<h2>Should you buy stock in AppLovin right now?</h2> Before you buy stock in AppLovin, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and AppLovin wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $483,476!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,362,941!* Now, it’s worth noting Stock Advisor’s total average return is 998% — a market-crushing outperformance compared to 207% for the S&amp;P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors. See the 10 stocks » *Stock Advisor returns as of May 19, 2026. Marc Guberti has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet and Meta Platforms. The Motley Fool has a disclosure policy. The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. </div></div>

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AppLovin's stock has dropped 27% year-to-date, despite a 687% gain over the past five years. The company faces scrutiny from short-sellers and an ongoing SEC probe regarding its business model. However, AppLovin continues to report strong financial results, including a 65.4% net profit margin and significant revenue growth. Analysts suggest caution before investing, as AppLovin was not included in a list of top recommended stocks.

Should You Buy the 27% Dip in AppLovin Stock?