By Angela Palumbo
AppLovin stock jumped on Monday after the company said it would immediately make $500 million available to buy back stock.
AppLovin said in a filing with the Securities and Exchange Commission on Friday that as of Thursday, it had about $1.77 billion remaining available under its share repurchase program, and that the amount of stock that could be bought back was limited to the total free cash flow in the preceding fiscal quarter.
But the advertising technology company said in the filing that the board of directors was changing the repurchase program.
"$500 million shall be immediately available for repurchase of shares of the Company's Class A common stock, notwithstanding the amount that otherwise would have remained available during the quarter under the prior Free Cash Flow limitation," the filing said. It also said that the buyback limit will now go up each quarter by the company's free cash flow from the prior quarter.
Stock buybacks can increase earnings per share by reducing the amount of shares outstanding. They also tend to lift stock prices because they signal a company is confident in its financial strength, and because the purchases themselves represent a source of demand for the shares.
Shares of AppLovin were up 7.3% to $23.76. The stock was the second-best performer in the Nasdaq 100 index on Monday.
AppLovin shares dropped 22% last week after two separate short sellers published negative reports about the company. That was the stock's worst weekly performance since the week ending Dec. 9, 2022, and its third worst week on record, according to Dow Jones Market Data.
Fuzzy Panda Research and Culper Research alleged in the short reports that AppLovin has been replicating Meta Platforms' ad targeting strategy, exposing the company to legal risks, and violating the terms of service of Alphabet and Apple's app stores.
Chief Executive Adam Foroughi published a blog post denying those and other allegations in the reports. Several Wall Street analysts published research notes saying the selloff following the reports was a good buying opportunity.
Shares of AppLovin have now risen 9% this year and 470% over the last 12 months.
Write to Angela Palumbo at angela.palumbo@dowjones.com
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
March 03, 2025 11:29 ET (16:29 GMT)
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