Applovin (APP  ) is a mobile game developer and also helps other developers manage and monetize their apps. The company went public last April and was able to raise $2 billion, selling 25 million shares at $80 per share.

Since its debut, the stock has declined by nearly 30% with the bulk of it coming on the first day of trading. The initial weeks following an IPO tend to be volatile especially as investors are unfamiliar with the company, and it might not have institutional backing. Often, a stock's initial reaction seems to be less about a company's fundamentals and more about the market's risk appetite.

For example, many high-growth, tech stocks that IPO'd in the latter parts of 2020 when growth stocks had an insatiable bid, saw gains upwards of 50% on the first day of trading. Currently, growth is out of favor, with many of these IPOs trading at new lows, so it's not surprising that Applovin got a chilly reception.

Applovin Profile

Applovin was founded in 2012 by Adam Foroughi, John Krystynak, and Andrew Karam. It was seeded with $4 million from angel investors and emerged from stealth mode in 2014 with customers such as OpenTable and Spotify (SPOT  ), providing app analytics.

In 2016, the company had an agreement to be acquired by a Chinese company for $1.6 billion, but this deal was scuttled due to national security concerns. In hindsight, this was a blessing for the company as its most explosive growth was to come. In part, this was due to the company's decision to use its insights into what works in the app market to build its own games and game studio.

This is now the fastest-growing part of the company and accounts for half of the company's revenue.

Stock Price Outlook

So Applovin has two units accounting for revenue growth - the products and services it sells to other app-makers, and its game business. The company publishes its own games and also has its own engine that other developers use to build their games.

In terms of its stock price, there are some reasons to be skeptical given that it competes in two saturated markets - app analytics and game development. Another concern is that revenue growth is slowing for both units. The company also doesn't seem close to profitability especially as its strategy involves continually buying other games to expand its portfolio. It also carries a heavy debt load and could be negatively affected by Apple's (AAPL  ) privacy changes which makes advertising less lucrative.

For these reasons, investors should probably avoid Applovin especially as there are so many other growth stocks that have been crushed over the past couple of months and look even more attractive.