AppLovin Corp (NASDAQ:APP) stock is up 6% this week after Scotiabank initiated coverage on the stock with a Sector Outperform rating and a price target of $430.
What To Know: Scotiabank analyst Nat Schindler pointed to three key reasons for the bullish rating. First, AppLovin’s AXON engine is being viewed as a "vast moat to cross for new entrants."
AXON is an AI-powered engine trained on more than $10 billion in historical ad spend. Specifically, the engine continuously optimizes real-time ad placement by learning from engagement signals and sales flow.
The analyst noted that AppLovin also recently opened its network to smaller companies, creating additional revenue opportunities. The move has already sparked a material increase in brand participation, as advertisers shift budgets from traditional paid social platforms to AppLovin in search of better ROI.
“With continued rollout, e-commerce could become the next $1 billion+ total addressable market for APP, acting as a second core revenue vertical after gaming,” Schindler said.
Lastly, the analyst pointed out that the company's reliance on rich first-party data and a broad on-device footprint through its SDK network helps shield it from regulatory risks. This positions AppLovin to thrive despite privacy regulations.
“AppLovin looks expensive on sales, but on EBITDA, we believe there is plenty of further upside to share prices, especially as APP fundamentally reshapes the landscape of performance advertising,” the Scotiabank analyst said.
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APP Price Action: At the time of writing, AppLovin stock is trading 2.87% higher at $354.63, according to data from Benzinga Pro.
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