We recently published a list of Top 10 Stocks to Buy According to Jericho Capital Asset Management. In this article, we are going to take a look at where AppLovin Corporation (NASDAQ:APP) stands against other top stocks to buy according to Jericho Capital Asset Management.
Jericho Capital Asset Management, founded in 2009 by Josh Resnick, is a New York-based hedge fund manager specializing in long/short equity strategies across developed and emerging markets. Resnick established the firm with a focus on identifying market inefficiencies and capitalizing on both undervalued and overvalued securities. The investment management firm specializes in the global technology, media, and telecommunications (TMT) sectors, offering a range of financial planning, advisory, and asset management services to institutional clients and high-net-worth individuals.
As an investment advisor, Jericho Capital provides discretionary investment advisory services to pooled investment vehicles, including hedge funds and private equity funds. These funds are typically structured as master-feeder funds, where feeder funds allocate their capital to a centralized master fund managed by the firm. This structure allows investors to access a diversified portfolio while benefiting from the firm’s expertise in security selection. Given the speculative nature of its strategies, the firm cautions investors about the substantial risks involved, including the potential for significant or complete loss of capital.
Jericho Capital employs a long/short investment strategy, aiming to generate returns by purchasing undervalued securities and short-selling overvalued ones. The firm may also pursue special opportunities strategies, which can involve distinct transaction costs and pricing structures. The success of these approaches relies heavily on the firm’s ability to accurately assess market opportunities, a process that is inherently complex and subject to fluctuations. Market volatility and economic disruptions can lead to unforeseen losses, requiring the firm to make strategic adjustments to protect investor capital.
Despite the risks, Jericho Capital’s approach appeals to investors seeking alternative investment strategies with the potential for high returns. By leveraging its expertise in equity markets, the firm positions itself as a key player in the hedge fund industry. While its investment styles involve substantial risks, its track record and disciplined investment framework make it a notable choice for those willing to embrace volatility in pursuit of long-term gains.
Currently the founder and managing partner of Jericho Capital, Josh Resnick played a key role at TCS Capital before launching Jericho Capital. TCS Capital was a prominent TMT-focused hedge fund that he joined shortly after its inception in 2001. Resnick’s extensive experience in finance and investment spans multiple industries, with a focus on identifying high-growth opportunities within rapidly evolving markets. Prior to his tenure at TCS Capital, Resnick served as a Managing Director at KPE Ventures, a New York-based venture capital firm dedicated to investments in media, entertainment, and technology. His expertise in business development was further honed during his time at Fox Entertainment Group in Los Angeles, where he was part of a strategic team overseeing expansion initiatives. He began his career in investment banking at Bear Stearns, working in the media and entertainment sector, where he gained critical experience in mergers, acquisitions, and corporate finance.
Resnick holds a Bachelor of Arts degree in Economics from Emory University, where he graduated Summa Cum Laude. His academic background provided a strong foundation for his career in investment management, equipping him with analytical skills essential for navigating complex financial markets. Beyond his professional achievements, Resnick is actively involved in philanthropy. He serves on the Board of Directors of the Child Mind Institute in New York City, a nonprofit organization dedicated to supporting children with mental health and learning disorders. His commitment to both finance and social impact underscores his well-rounded leadership in the investment world.
As of its latest filing for the fourth quarter of 2024, Jericho Capital Asset Management reported managing approximately $7 billion in 13F securities. The firm maintains a moderately concentrated portfolio, with its top ten holdings making up 64.13% of total assets. This level of concentration suggests a high-conviction investment strategy, where the firm places significant emphasis on a select group of stocks it believes have strong growth potential. The firm’s investment decisions reflect its focus on the global technology, media, and telecommunications sectors, indicating confidence in the long-term growth prospects of these industries. Overall, Jericho Capital’s portfolio structure highlights its strategic focus and deep industry expertise. Its investment approach aligns with a belief in innovation-driven sectors, making it a key player in the hedge fund landscape.
The stocks discussed below were picked from Jericho Capital Asset Management’s Q4 2024 13F filings. They are compiled in the ascending order of the hedge fund’s stake in them as of December 31, 2024. To assist readers with more context, we have included the hedge fund sentiment regarding each stock using data from 1009 hedge funds tracked by Insider Monkey in the fourth quarter of 2024.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
Is AppLovin Corporation (APP) the Top Stock to Buy According to Jericho Capital Asset Management?
A close-up of a mobile device, showing an advertiser reaching out to a consumer via a software-based platform.
Number of Hedge Fund Holders as of Q4: 95
Jericho Capital Asset Management’s Equity Stake: $904.70 Million
AppLovin Corporation (NASDAQ:APP), a leading mobile technology company based in Palo Alto, California, specializes in helping developers market, monetize, and analyze their apps through platforms like MAX, AppDiscovery, and SparkLabs. In its financial results for the fourth quarter and full year ending December 31, 2024, the company reported impressive growth. Q4 revenue surged 44% year-over-year to $1.37 billion, while net income skyrocketed 248% to $599.2 million. For the full year 2024, total revenue reached $4.71 billion, marking a 43% increase from 2023, with net income soaring 343% to $1.58 billion.
AppLovin Corporation (NASDAQ:APP)’s advertising business was the primary driver of this growth, with Q4 advertising revenue jumping 73% year-over-year to $999.5 million. Full-year advertising revenue increased by 75%, reflecting AppLovin’s success in expanding its marketing platform. However, the apps revenue segment experienced a slight 1% decline in Q4 2024, though it still managed a 3% annual increase. The company remains focused on strengthening its core advertising business, which now accounts for the majority of its revenue.
AppLovin Corporation (NASDAQ:APP) also executed significant shareholder returns, retiring and withholding 1.6 million shares in Q4 and 25.7 million shares over the full year, totaling $2.1 billion in buybacks. Additionally, the company generated strong cash flow, with $701 million in net cash from operating activities in Q4 and $2.1 billion for the year. Free cash flow mirrored these figures, demonstrating financial stability and effective capital allocation.
Looking ahead, AppLovin Corporation (NASDAQ:APP) has set optimistic guidance for the first quarter of 2025, forecasting revenue between $1.355 billion and $1.385 billion. Advertising revenue is expected to range from $1.03 billion to $1.05 billion, while apps revenue is projected between $325 million and $335 million. The company also anticipates an adjusted EBITDA of $855 million to $885 million, with a robust margin of 63% to 64%. With continued investment in its advertising ecosystem and strategic initiatives, AppLovin is well-positioned for further growth in the mobile technology sector.
ClearBridge Mid Cap Strategy stated the following regarding AppLovin Corporation (NASDAQ:APP) in its Q4 2024 investor letter:
“Stock selection in IT was the greatest contributor to performance on strength in AppLovin Corporation (NASDAQ:APP) and Marvell. AppLovin is the world’s leading mobile game and app advertising platform, providing software for marketing and monetization, powered by its proprietary AI targeting engine Axon. We see opportunity for AppLovin to continue to expand and grow its share of the market for mobile app marketing at a time when mobile gaming ad spend is recovering from a higher-rate-driven trough. We also see the potential for the company to expand its addressable market to include e-commerce advertising, around which initial forays have been encouraging. With strong incremental margins and management keeping expenses controlled, the company should be able to drive significant free cash flow growth as revenue continues to scale.”
Overall, APP ranks 1st on our list of top stocks to buy according to Jericho Capital Asset Management. While we acknowledge the potential for APP as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than APP but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
