What Happened?
Shares of mobile app technology company AppLovin (NASDAQ: APP) jumped 3.9% in the afternoon session after analysts at both UBS and Piper Sandler significantly raised their price targets on the stock.
UBS maintained its 'Buy' rating on AppLovin while increasing its price target by 50% to $810. In a similar move, Piper Sandler also kept its 'Overweight' rating but lifted its target to $740 from $500. Piper Sandler's analysts noted their excitement about the company's upcoming Axon Ads Manager soft launch. The positive commentary from Wall Street reflected strong confidence, with analysts describing the company as a "top pick" with the "potential to be a top advertising player.".
After the initial pop the shares cooled down to $665.41, up 4% from previous close.
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What Is The Market Telling Us
AppLovin’s shares are extremely volatile and have had 57 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 16 days ago when the stock gained 2.1% as it continued its upward momentum following the announcement of its inclusion in the S&P 500 index.
The stock initially surged nearly 12% on after the news broke. Inclusion in the prestigious index is a significant catalyst, as it compels passive funds and ETFs that track the S&P 500 to purchase AppLovin shares, creating structural demand for the stock. This addition also serves as a mark of credibility, often drawing increased attention from institutional investors.
The positive move on Wednesday was also supported by broader market strength, as the S&P 500 and Nasdaq both trended higher. The company's recent strong financial performance, including 77% year-over-year revenue growth in the second quarter, has also bolstered investor confidence.
AppLovin is up 94.7% since the beginning of the year, and at $665.41 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 $10,207.
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