Why AppLovin Stock Was Moving Higher Today
Key Points
AppLovin stock fell sharply in the software sell-off last week, setting up a rebound.
Analysts say its Axon AI engine is performing well.
A short-seller retracted its claims yesterday.
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Shares of AppLovin (NASDAQ: APP) were moving higher today as the fast-growing adtech company continued to bounce back after last week's sell-off ahead of its fourth-quarter earnings report tomorrow.
Yesterday, the stock jumped after a short-seller, CapitalWatch, retracted its accusation last month that the company was laundering money, and today it got a bullish note from Wall Street.
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As of 11:01 a.m. ET, the stock was up 2.7% on the news.
Image source: Getty Images.
AppLovin sentiment reverses
The biggest piece of news out on AppLovin was that UBS lowered its price target on the stock from $840 to $686, reflecting the stock's recent pullback, but maintained a buy rating on the stock.
In the note, UBS said that AppLovin benefited from strong return on ad spend (ROAS) from its AI engine, Axon 2.0, as well as growing e-commerce spend and increasing advertiser adoption.
That came out one day after Jefferies reiterated a buy rating and a price target of $860 on the stock, saying that many of the recent concerns that have driven the stock lower were overblown.
What to expect from AppLovin's earnings report
Expectations seem to be improving heading into AppLovin's fourth-quarter report, and digital advertising giants Alphabet and Meta Platforms reported strong results for their fourth quarters, showing robust advertising demand.
Analysts expect the company to report $1.61 billion in revenue, up 48.1% from the quarter a year ago, and for adjusted earnings per share to increase from $2.07 to $3.07.
Other analysts have also reported strong growth in Axon adoption, so the signs are there for a post-earnings pop in AppLovin. We'll get the full story tomorrow afternoon when the adtech company reports earnings.
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Jeremy Bowman has positions in AppLovin and Meta Platforms. The Motley Fool has positions in and recommends Alphabet, Jefferies Financial Group, and Meta Platforms. The Motley Fool has a disclosure policy.
