APP Stock Alert: Apple deals a blow to AppLovin, causing shares to fall

Without much noise, consumer tech juggernaut Apple (NASDAQ:AAPL) has made a change to its advertising attribution framework. This could impact the mobile advertising specialist AppLovin (NASDAQ:APP), which used the previous framework to support Apple’s analytics policy while addressing online privacy concerns. The potential revenue loss sent APP stock plummeting, although this could also be an overreaction.

According to Ad Exchanger Apple reportedly offers two types of ad attribution. One is called SKAdNetwork, which protects user privacy while enabling important analytics—that is, providing information about which ads led to more engagement or sales. The other is called Private Click Measurement, which offers the same functionality but for the web.

Apple has provided developer documents showing that the tech giant is phasing out the above names for ad attribution programs and replacing them with App AdAttributionKit and Web AdAttributionKit, both entities falling under the broader term AdAttributionKit.

What could be worrying for AppLovin stock is that the previous SKAdNetwork was a chaotic framework. Ad Exchangerit is “an overly complicated tool that does less to protect privacy than to undermine the effectiveness of advertising in the name of privacy.”

APP stock may face headwinds, but analysts are still excited

With SKAdNetwork potentially being replaced by another framework, AppLovin could lose relevance. In addition, the company has a large customer, which is causing many investors to exit quickly. Nevertheless, it is also worth noting that APP stock has shown strong performance to date.

Since the beginning of the year, the shares have almost doubled in value. In the last year, AppLovin stock has risen by over 240%, an impressive feat. As such, much of the social commentary suggests that retail investors think the volatility is an overreaction.

It is particularly worth noting that Wall Street analysts are consistently bullish on APP stock, generally rating the stock as a Strong Buy with an average price target of $95.05. That implies an upside potential of more than 23% from the current price at the time of writing. The overall rating is broken down into 10 Buys and three Holds.

And finally, the forecasts are very tempting. For the 2024 fiscal year, market experts expect earnings per share of $3, an increase of 206% compared to the previous year’s result. Revenue could be $4.37 billion, 33.1% more than the $3.28 billion in 2023.

At the time of publication, Josh Enomoto had no position (either directly or indirectly) in the securities mentioned in this article. The opinions expressed in this article are those of the author and are subject to InvestorPlace.com Publishing guidelines.