Why AppLovin Stock Zoomed Almost 19% Higher This Week

Key Points

• The company is soon to be a component of a major stock index.

• In fact, many consider this index to be the No. 1 equity market indicator.

• 10 stocks we like better than AppLovin ›

According to data compiled by S&P Global Market Intelligence., AppLovin's (NASDAQ: APP) stock was among the market's most-loved this week, rising by nearly 19% in price over the period. That was entirely understandable, as the shares were tapped for an inclusion on one of the top stock indexes in the world, and capped the week by being the subject of an analyst price target raise.

Index inclusion

Just after market close last Friday, index compiler S&P Dow Jones Indices, a division of S&P Global, announced that AppLovin would be a component stock of its bellwether S&P 500 (SNPINDEX: ^GSPC). This was among a series of adjustments made by S&P Dow Jones Indices as part of its quarterly "rebalancing" to reflect changes in market cap for certain stocks.

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Image source: Getty Images.

AppLovin is being accompanied by next-generation brokerage Robinhood Markets and mechanical/electrical systems specialist EMCOR Group in the current round of S&P 500 advancement. The three stocks are displacing current components MarketAxess Holdings, Caesars Entertainment, and Enphase Energy.

These changes will take effect before market open on Monday, Sept. 22.

Double-digit potential

Friday morning, Wedbush analyst Alicia Reese added to the generally positive sentiment on AppLovin by raising her price target on the stock. That hike was substantial, as the pundit cranked it 17% higher to $725 per share, well up from the previous $620. At AppLovin's most recent closing price, the new level anticipates upside of nearly 25%.

According to reports, Reese's move was based on what she considers to be strong and sustainable growth in several of the company's customer segments, including gaming and e-commerce.

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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends EMCOR Group and S&P Global. The Motley Fool recommends Enphase Energy and MarketAxess. The Motley Fool has a disclosure policy.