What Happened:
Shares of mobile app advertising platform AppLovin (NASDAQ: APP) jumped 5.7% in the morning session after UBS analyst upgraded the stock's rating from Neutral to Buy and raised the price target from $100 to $145. The new price target implied a potential 15% upside from where shares traded when the upgrade was announced. The analyst added, "We have been warming to APP's execution on the gaming opportunity for a while ... and believe the [e-commerce total addressable market] could drive upside to our above Wall Street's estimates."
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What is the market telling us:
AppLovin’s shares are very volatile and over the last year have had 27 moves greater than 5%. In context of that, today’s move is indicating the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The biggest move we wrote about over the last year was 7 months ago, when the stock gained 24.7% on the news that the company reported fourth-quarter results with revenue, adjusted EBITDA, and EPS exceeding Wall Street's expectations. The solid performance was driven by a combination of factors, including a strong holiday season, mobile advertising market growth, and software platform improvements. Looking ahead, guidance for Q1 2024 revenue and adjusted EBITDA were both convincingly ahead as well. Overall, this was a really good quarter that should please shareholders.
AppLovin is up 215% since the beginning of the year, and at $122.15 per share, has set a new 52-week high. Investors who bought $1,000 worth of AppLovin’s shares at the IPO in April 2021 would now be looking at an investment worth $1,872.
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