AppLovin Stock Surged Nearly 30% After Earnings—Watch These Key Price Levels

AppLovin (APP) shares soared nearly 30% higher in extend trading on Wednesday after the artificial intelligence (AI)-powered advertising platform topped Wall Street’s fourth quarter earnings expectations and issued a better-than-expected current-quarter outlook.

The company, whose software helps monetize gaming apps with targeted ads, projected first quarter revenue of between $1.36 billion and 1.39 billion, handily surpassing the $1.32 billion expected by analysts. Executives said $1 billion of net sales will come from AppLovin’s advertising segment, adding that the company it still in the early stages of bolstering its AI models.

AppLovin shares have jumped 17% since the start of the year as of Wednesday’s close and soared more than 700% over the past 12 months amid surging demand for the company’s AI-powered advertising system.

Below, we break down the technicals on AppLovin’s weekly chart and point out key post-earnings price levels worth watching.

Pennant Pattern Breakout

Since reaching their all-time high (ATH) in early December, AppLovin shares a consolidated within a pennant, a chart pattern that signals a continuation of the stock’s uptrend.

Indeed, the price looks set to open sharply higher on Thursday, setting the stage for the stock’s next move higher.

While the relative strength index (RSI) confirms bullish price momentum with a reading above 70, a move higher into overbought territory also increases the chances of dips linked to profit taking.

Let’s apply technical analysis to forecast an upside price target and also locate several major support levels that could into play during potential retracements.

Measured Move Price Target

To forecast an upside price target, investors can use the measured move technique, also know by chart watchers as the measuring principle.

When applying the analysis to AppLovin’s chart, we calculate the distance of the uptrend that immediately preceded the pennant in points and add that amount to the pattern’s upper trendline.

For example, we add $357 to $397, which projects an upside price target of $754, an area where investors may decide to lock in profits.

Major Support Levels to Watch

During pullbacks, the stock could see an initially dip to around $290. This level on the chart may provide support near the pennant pattern’s low, which closely aligns with the closing price of a weekly wide-ranging bar in early November.

Selling below this level opens the door for a drop to around $168, a price where the shares may attract buying interest near the closely-watched 50-period moving average and a brief range of consolidation prior to last November’s election-driven surge.

Finally, a deeper correction in AppLovin shares could trigger a decline to lower support around $116. Investors who employ buy-and-hold strategies could seek entry points in this region near the stock’s prominent November 2021 swing high.

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As of the date this article was written, the author does not own any of the above securities.