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Investing.com -- Bank of America reaffirmed its Buy rating on AppLovin (NASDAQ:APP) and maintained the stock as its top pick in a note Monday, despite a recent short seller report.
The firm kept its price objective at $580, saying the concerns raised by Muddy Waters on March 27 "fail the sniff test."
BofA analysts dismissed claims that AppLovin is at high risk of being de-platformed from iOS, Android, or Meta (NASDAQ:META), arguing that the report describes “business as usual in the online advertising industry.”
The bank also found no evidence that Apple’s App Tracking Transparency (ATT) policies have been violated, noting that AppLovin’s Audience+ product collects data in the same way as Meta and Google (NASDAQ:GOOGL).
“The use of unique identifiers attached to 1P cookies within advertiser’s websites, accessed through browsers such as Safari, Chrome, etc., does not contravene Apple’s ATT,” BofA wrote.
Tracking in browsers follows different privacy laws, such as GDPR and CCPA, rather than Apple’s ATT framework.
Regarding claims that Audience+ lacks value, BofA countered that incrementality in advertising cannot be measured simply by first clicks.
“Measuring incrementality requires A/B tests on multiple user groups exposed to different ads, which only advertisers could do,” analysts noted. They also highlighted that retargeting is an essential part of all digital ad platforms, including Meta and Google.
Despite multiple short seller reports this year, BofA remains bullish on AppLovin. The firm sees the current 17x EV/CY26 EBITDA as inexpensive, given AppLovin’s expected 50% two-year EBITDA CAGR. “APP remains our top pick,” analysts concluded.