Why AppLovin Stock Cratered on Tuesday

Shares of AppLovin (NASDAQ: APP) tumbled on Tuesday, falling as much as 16.3%. At 12:28 p.m. ET, the stock was still down 11.1%.

The catalyst that sent the app marketing and monetization platform lower was an audacious offer to merge with a larger company in the software space.

AppLovin submitted a "compelling non-binding proposal" to combine with video game engine Unity Software (NYSE: U). Under the terms of the proposed all-stock deal, each outstanding share of Unity stock would be exchanged for 1.152 shares of AppLovin Class A voting stock and 0.314 shares of AppLovin Class C non-voting stock. This would result in Unity shareholders receiving 55% of the outstanding shares of the combined company, while AppLovin shareholders would control the remainder, though AppLovin would maintain 51% of the voting control. 

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Source Fool.com