AppLovin is the IBD Stock Of The Day as the mobile app marketing platform is seen benefiting from its investments in artificial intelligence. AppLovin stock also is nearing a proper buy point.
"We view AppLovin's AI investments, in particular the launch of the Axon 2.0 targeting algorithm, as a sustainable advantage that may take years for competitors to replicate," Jefferies analyst James Heaney said in a client note Sunday. Heaney rates AppLovin stock as buy with a price target of 105.
On the stock market today, AppLovin stock gained a fraction to close at 83.22. IBD MarketSurge charts show that AppLovin stock is in a flat base with a buy point of 88.50.
However, aggressive investors could use the June 20 high of 82.66 as an early entry, according to IBD analysis. It hit that level Thursday, breaking a tight trendline as it rebounded from its 50-day moving average line, a key support level.
AppLovin Stock Up After Q1 Report
AppLovin's formal buy point of 88.50 marks a more-than two-year high. It reached that price after the Palo Alto, Calif.-based company reported first-quarter results on May 8.
AppLovin smashed Wall Street's targets for the March-ended quarter and guided higher for the current period. It earned 67 cents a share, vs. a year-earlier loss of a penny a share. Sales jumped 48% to $1.06 billion. Analysts polled by FactSet had expected Q1 earnings of 57 cents a share on sales of $974 million.
For the current quarter, AppLovin predicted revenue of $1.06 billion to $1.08 billion. The midpoint of $1.07 billion topped Wall Street's second-quarter target of $1.01 billion.
AppLovin's software platform enables app developers to market, monetize and analyze their apps. The company also makes mobile games such as "Bingo Story," "Game of War" and "Solitaire Cruise."
Axon 2.0 Is Ahead Of Competition
AppLovin's Axon 2.0 has proved its value to customers, Heaney says.
"Over the last year, AppLovin's launch of Axon 2.0 has driven sizable performance gains for mobile app advertisers," he said. "Perhaps the most impressive metric is the 87% year-over-year growth in app install volume in Q1, which indicates that AppLovin's platform is nearly two times as effective as it was a year ago."
AppLovin launched Axon 2.0 in early 2023. The advertising engine leverages predictive modeling to help mobile game advertisers buy the right ad impression at the right price.
"We believe Axon 2.0's AI-based ad platform is driving material share gains" for AppLovin, Heaney said.
AppLovin executives say the company's ongoing improvements to Axon 2.0 "should create a durable advantage that would take significant time and resources for any competitors to catch," Heaney said.
AppLovin stock ranks first out of 37 stocks in IBD's Computer Software-Special Enterprise industry group. It has a best-possible IBD Composite Rating of 99, according to IBD Stock Checkup.
Further, AppLovin stock is on the IBD Tech Leaders list.
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