Why AI Stock AppLovin Crushed It on Monday

Adtech company AppLovin (NASDAQ: APP) was an outlier on the stock market in the best way as the trading week kicked off. On Monday, following a new and rather bullish note from a researcher tracking its fortunes, AppLovin's stock bounced almost 5% higher. That handily beat the S&P 500 (SNPINDEX: ^GSPC), which had a good if not spectacular day with a 0.5% rise.

A bull weighs in again

Before market open, Jefferies published a fresh report on AppLovin. In it, a team of pundits led by James Heaney reiterated its buy recommendation on the stock, citing numerous reasons to continue being optimistic about its future.

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According to reports, Heaney and his peers believe that spending on e-commerce advertising rose sequentially in the second calendar quarter of this year, and should continue to motor ahead in the third. AppLovin is poised to boost its revenue purely thanks to this dynamic.

Jefferies added that AppLovin aims to roll out its offerings to a wider customer base next year, another factor that should bring in more business. It is also apparently contemplating a reduction of its gross merchandise value (GMV) minimum for clients, which currently stands at $10 million.

Meanwhile, a recent double-digit swoon in AppLovin's share price makes it particularly attractive at the moment. Investors have been concerned with a short-seller report that dinged the company's reputation, product delays, and other developments. However, in the Jefferies team's view, none of these should be long-term drags on the specialty tech stock's value.

Concerning allegations

Although personally, I'd agree mostly with this assessment, I still feel that the short-seller report brought up some concerns about AppLovin. I also feel company management hasn't sufficiently addressed these, and that in itself is a bit worrying. I'd be more comfortable with this stock -- which surely has potential for the reasons Jefferies stated -- if management did so.

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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends AppLovin and Jefferies Financial Group. The Motley Fool has a disclosure policy.