Sands Capital Technology Innovators Fund Added AppLovin (APP) on a Dip

Sands Capital, an investment management company, released its “Sands Capital Technology Innovators Fund” Q1 2025 investor letter. A copy of the letter can be downloaded here. Technology Innovators focus on pioneering businesses worldwide that serve as key drivers or beneficiaries of significant long-term changes driven by technology. The fund returned -10.4% (net) in the first quarter compared to a 9.4% return for the benchmark, MSCI ACWI Info Tech and Communication Services Index. The choice of securities in the software sector was the primary factor negatively impacting relative performance. You can check the fund’s top 5 holdings to know more about its best picks for 2025.

In its first-quarter 2025 investor letter, Sands Capital Technology Innovators Fund highlighted stocks such as AppLovin Corporation (NASDAQ:APP). AppLovin Corporation (NASDAQ:APP) develops a software-based platform for advertisers to enhance the marketing and monetization of their content. The one-month return of AppLovin Corporation (NASDAQ:APP) was 41.44%, and its shares gained 354.06% of their value over the last 52 weeks. On May 27, 2025, the stock of AppLovin Corporation (NASDAQ:APP) closed at $380.91 per share, with a market capitalization of $128.895 billion.

Sands Capital Technology Innovators Fund stated the following regarding AppLovin Corporation (NASDAQ:APP) in its Q1 2025 investor letter:

"AppLovin Corporation (NASDAQ:APP) is one of the leading providers of advertising solutions for mobile game developers. Its stock price decline stemmed from a broader selloff in high-beta stocks, exacerbated by multiple short reports. These reports allege app-install manipulation and improper data attribution—claims we view as largely unfounded. AppLovin’s revenue is tied to purchases, not clicks, and its customers use sophisticated attribution tools. Given the opaque nature of ad tech, we took added precautions in our due diligence, consulting ad fraud experts and a forensic accountant. We see no new concerns that alter our conviction and believe the selloff has improved the long-term risk-reward in our favor.

AppLovin is one of the leading providers of advertising solutions for mobile game developers. The business aggregates advertising inventory for mobile gaming, offering a suite of products to track advertising performance to optimize distribution and monetization. The company has a dominant position in mobile ad mediation, as well as a strong position on the demand side. Since the launch of Axon 2.0, its artificial intelligence-based advertising model, AppLovin has begun fine-tuning its large language model for ecommerce, receiving strong early feedback from ecommerce advertisers. In our view, this provides an opportunity for the business to expand outside its core gaming vertical to ecommerce and aggregate demand from nongaming applications. While this opportunity is early, the unconstrained nature of performance advertising provides upside to both the magnitude and duration of growth that AppLovin could sustain if successful."

AppLovin Corporation (NASDAQ:APP) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 96 hedge fund portfolios held AppLovin Corporation (NASDAQ:APP) at the end of the first quarter, which was 95 in the previous quarter. AppLovin Corporation's (NASDAQ:APP) total revenue surged 40% from Q1 2024 to $1.5 billion. While we acknowledge the potential of AppLovin Corporation (NASDAQ:APP) as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is as promising as NVIDIA but that trades at less than 5 times its earnings, check out our report about the undervalued AI stock set for massive gains.

In another article, we covered AppLovin Corporation (NASDAQ:APP) and shared the list of best technology stocks to buy for long-term investment. Carillon Eagle Mid Cap Growth Fund also analyzed AppLovin Corporation (NASDAQ:APP) in its Q1 2025 investor letter and attributed its decline during the quarter to the same factors. In addition, please check out our hedge fund investor letters Q1 2025 page for more investor letters from hedge funds and other leading investors.

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Disclosure: None. This article is originally published at Insider Monkey.