AppLovin has already become one of Wall Street’s more closely watched artificial-intelligence advertising stories.
The company’s growth has been fast enough to raise a different question for investors: How much more can it squeeze out of mobile ads after such a large run?
Morgan Stanley says the answer may come down to a hidden metric inside AppLovin’s (APP) advertising engine. In a Morgan Stanley note given to TheStreet, analyst Matthew Cost and team reiterated an Overweight rating on AppLovin and a $720 price target. That target sits well above AppLovin’s May 22 closing price of $481.68.
The firm also laid out a $1,100 bull case if one key operating metric keeps improving. Morgan Stanley sees a bigger AppLovin runway Morgan Stanley’s bull case centers on conversion rates, or how often an ad shown through AppLovin leads to an install or another desired consumer action. The firm says about 99% of AppLovin’s ads still do not convert.