Adtech company AppLovin (APP -5.99%) had a Tuesday it would probably rather forget, at least as far as its stock is concerned. The fallout from its disappointing second-quarter earnings report, published last week, continued. This was exacerbated by an analyst's recommendation downgrade. AppLovin's shares fell by almost 6% that trading session.
A new neutral stance
The pundit behind that move was Omar Dessouky of Bank of America Securities. Well before market open, he changed his rating on AppLovin from buy to neutral. This was accompanied by a reduction in the stock's price target to $400 per share from $430.
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According to reports, Dessouky expressed concern that the company won't be able to post the 30% year-over-year revenue growth it has targeted over the long term. In his view, recent improvements to the finances appeared to be due mostly to engineer-directed enhancements to AppLovin's gaming models.
The analyst also cast some doubt on the longevity of efficiency gains from the company's artificial intelligence (AI)-powered self-learning analytical capabilities.
NASDAQ: APP
Key Data Points
Has it landed in the bargain basement?
While I understand these concerns, I should point out that AppLovin is still growing at impressive double-digit rates. Growth might be slowing, but not to the point where investors should impulsively throw in the towel. The recent weakness in the stock, then, is starting to look like an attractive buy-at-a-discount opportunity for this still high-potential company.
