What Happened?
Shares of mobile app advertising platform AppLovin (NASDAQ: APP) jumped 6.4% in the afternoon session after the company received a reiterated "Buy" rating from a major Wall Street bank and reports of significant institutional buying. Citi reiterated its "Buy" rating and a $600 price target on the mobile technology company, signaling confidence ahead of its second-quarter earnings report. The bank expects AppLovin's results to be at the high end of its guidance.
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What Is The Market Telling Us
AppLovin’s shares are extremely volatile and have had 62 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 5 days ago when the stock gained 3.3% on the news that analysts at Scotiabank upgraded the stock to a "strong-buy" rating. The investment bank's positive reassessment of the mobile technology company has signaled renewed confidence in its growth prospects. This upgrade is the latest in a series of optimistic analyst ratings for AppLovin. Scotiabank's analyst highlighted that AppLovin has "blown through the Rule of 40," a key metric for software investors that balances revenue growth with profit margins. To pass the test, a company's combined growth rate and profit margin should exceed 40%.
AppLovin is up 5.1% since the beginning of the year, but at $359.28 per share, it is still trading 29.6% below its 52-week high of $510.13 from February 2025. Investors who bought $1,000 worth of AppLovin’s shares at the IPO in April 2021 would now be looking at an investment worth $5,510.
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