What Happened:

Shares of mobile app advertising platform AppLovin (NASDAQ: APP) jumped 5.86% in the after-market session after analyst Omar Dessouky of Bank of America upgraded the stock's rating from Neutral (Hold) to Buy and raised the price target from $21 to $27. The analyst added that "Applovin's new machine learning engine will accelerate revenue growth in 2023." In the last earnings press release, AppLovin emphasized that upgrading the core machine learning AXON technology will be one of the three key growth initiatives within the Software Platform segment. The AXON technology was launched two years ago and leverages predictive technology to improve the efficiency of AppLovin's advertising platform by matching apps with the users who are most inclined to install them.

What is the market telling us:

AppLovin's shares are very volatile and over the last year have had 73 moves greater than 5%. In context of that, today's move is indicating the market considers this news meaningful but not something that would fundamentally change its perception of the business. The previous big move was 7 days ago, when the company gained 12.3% on the news that the company reported first-quarter revenue, gross profit, adjusted EBITDA, and free cash flow ahead of analysts' estimates. Software Platform revenue beat convincingly by roughly 15%, with management highlighting "stabilization in the mobile app ad market and continued improvements in our core advertising technology resulting in higher revenue per install from our advertising solutions" as drivers. Additionally, revenue and adjusted EBITDA guidance for the next quarter came in ahead of Consensus, the latter beating by nearly 10%. Year-to-date through May 8th, the company also repurchased $202 million of common stock--rare among faster-growing SaaS companies--with another $210 million remaining under authorization. Overall, it was a decent quarter highlighting several improvements. The strong guidance was also encouraging considering an uneven macro backdrop.

AppLovin is up 129% since the beginning of the year, but at $24.53 per share it is still trading 43.9% below its 52-week high of $43.75 from June 2022. Investors who bought $1,000 worth of AppLovin's shares at the IPO in April 2021 would now be looking at an investment worth $376.15.

Is now the time to buy AppLovin? Access our full analysis of the earnings results here, it's free.