Why Shares of AppLovin Were Soaring Today
Key Points
A research firm said that Meta would not bid on non-IDFA iOS traffic.
That traffic, which is untagged, is a major source of AppLovin's business.
The company continues to deliver strong growth, in part due to the strength of its AXON AI engine.
Shares of AppLovin (NASDAQ: APP) were moving higher today on a report from Edgewater that Meta Platforms, one of its biggest competitors, is unlikely to bid on non-IDFA (identifier for advertisers) iOS traffic in the near-term. IDFA is the tool that allows Apple's iOS to track users, so advertisers can use their data.
That should open up more of the market for AppLovin, and it drove shares of the stock up 10.6% as of 10:57 a.m. ET today.
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What it means for AppLovin
One of AppLovin's strengths is monetizing non-IDFA iOS traffic, meaning users who haven't agreed to be tracked through conventional means. AppLovin's AXON AI engine uses contextual signals and proprietary algorithms to track users, and that business has been the core driver of its recent growth.
Meta is a huge player in digital advertising and on iOS, so its decision to not compete in that market is favorable to AppLovin, and some interpreted it as a reflection of AppLovin's strength.
What's next for AppLovin
AppLovin's AXON AI engine and its strength in mobile continue to drive significant growth for the company as revenue jumped 59% in the first quarter to $1.8 billion, and its net income from continuing operations was up 67%.
It's unclear if Meta will eventually compete for Non-IDFA iOS traffic, but the decision shows AppLovin's competitive advantage. The adtech stock has been volatile this year, in part due to broader concerns about AI disruption in software, but AppLovin's proprietary AI appears to be a source of strength for the company. It's unlikely to be disrupted by a custom-AI product.
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Jeremy Bowman has positions in AppLovin. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
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