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Investing.com -- Shares of AppLovin Corp (NASDAQ: NASDAQ:APP) climbed 8% after Bank of America (BofA) Securities analysts expressed a positive outlook on the company. The rise comes as a respite from the stock’s recent 32% drop over the past month, which was exacerbated by short seller interest and the company’s exclusion from the S&P 500 index inclusion.
BofA Securities analyst Omar Dessouky maintained a Buy rating on AppLovin, with a price target of $580.00. Dessouky’s endorsement appears to have bolstered investor confidence, providing a counter-narrative to the negative sentiment that had previously surrounded the company.
The analyst’s comments followed a meeting with AppLovin’s CEO in New York City, where the company’s long-term competitive advantages and potential to capture a significant share of digital ad spend were discussed. "In our opinion, management’s articulation of the secular bull thesis becomes more effective with each investor meeting - we think investors will soon connect the dots," said Dessouky in a statement.
Dessouky also addressed the recent market volatility and scrutiny from short sellers, suggesting that these factors have resulted in an attractive entry point for investors to acquire shares of a "secular grower" at a discount. He compared AppLovin’s valuation favorably to peers such as Google (Alphabet (NASDAQ:GOOGL) Inc) and Meta Platforms Inc (NASDAQ:META), as well as to companies benefiting from artificial intelligence, citing a projected EBITDA compound annual growth rate (CAGR) of over 50% over two years.
The positive assessment from BofA Securities comes at a crucial time for AppLovin, as the company seeks to reassure investors of its market position and growth trajectory amidst a challenging period marked by increased short selling activity and market volatility.
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