Wall Street analysts have backed AppLovin (APP) stock after the U.S.-based mobile tech company came under attack from short seller reports. APP stock plunged 23% on Wednesday, marking its biggest one-day drop ever, before closing down 12%. The decline followed allegations from two short sellers that the company was exaggerating how good its AI-powered ad system is. Nonetheless, analysts at Wedbush and UBS have reiterated their Buy ratings on APP stock, shrugging off the short seller claims.
Put simply, AppLovin provides AI-powered solutions designed to help companies expand their advertising reach. Despite the recent setback, AppLovin stock has surged over 400% in the last 12 months, driven by optimism around its AI-powered technology.
Wedbush Calls AppLovin Short Reports “Misguided”
Wedbush calls the short seller reports on AppLovin “misguided.” It dismisses the reports as inaccurate and argues that if AppLovin were truly committing fraud, it would have already faced legal action from former employees, Facebook’s parent Meta (META), advertisers, or competitors. Wedbush also pointed out that AppLovin’s financial reports are audited, and no fraud concerns have been raised by the auditors.
In context, AppLovin is being accused of misusing app permissions to secretly install apps on users’ phones through ads. The reports also claims that the company is allegedly taking data from Meta to boost its e-commerce business.
Wedbush analyst Michael Pachter targets APP stock at $620, expecting 87% growth.
UBS Sees AppLovin Sell-off as an Overreaction
Meanwhile, UBS 4.5-star-rated analyst Chris Kuntarich thinks the market’s reaction was too extreme and the report may continue to weigh on the stock until AppLovin directly addresses the claims. He also believes the report exaggerates the role of clicks and installs compared to actual ad performance. UBS maintains a Buy rating with a $630 price target on APP stock.
Is AppLovin Stock a Good Buy?
According to TipRanks, APP stock has received a Strong Buy consensus rating based on 14 Buys and four Holds assigned in the last three months. The average price target for AppLovin is $539.8, suggesting an upside of 63.1% from its current price.
