Without much noise, consumer tech juggernaut Apple (NASDAQ:AAPL) made a change to its advertising attribution framework. That may impact mobile advertising specialist AppLovin (NASDAQ:APP), which utilized the prior framework to support Apple’s analytics directive while still respecting online privacy concerns. The potential loss of revenue sent APP stock tumbling, though it could also be an overreaction.
According to an AdExchanger report, Apple offers two types of ad attribution. One is called SKAdNetwork, which protects user privacy while still facilitating critical analytics; that is, providing information about which ads led to greater engagement or sales. The other is called Private Click Measurement, which offers the same functionality but for the web.
Apple provided developer documentation indicating that the tech giant is phasing out the aforementioned ad attribution program names and replacing them with App AdAttributionKit and Web AdAttributionKit. Both of these units fall under the wider AdAttributionKit umbrella.
What may be worrisome for AppLovin stock is that the prior SKAdNetwork represented a messy framework. Per AdExchanger, it “is an overly complicated tool that does less to preserve privacy than it does to undermine ad effectiveness in the name of privacy.”
APP Stock May Face Headwinds, But Analysts Still Love It
With SKAdNetwork potentially being replaced with a different framework, AppLovin may lose relevance. Not only that, it’s with a major customer, leading many investors to rush for the exits. Still, it’s also worth pointing out that APP stock has been a strong performer up until today.
Since the beginning of the year, shares almost doubled in value. Over the trailing one-year period, AppLovin stock finds itself up over 240%, an impressive performance. Therefore, much of the social commentary suggests retail investors believe the volatility is an overreaction.
Notably, Wall Street analysts are resoundingly bullish on APP stock, rating shares a consensus strong buy with an average price target of $95.05. That implies more than 23% upside potential from the current time-of-writing price. The overall assessment breaks down as 10 buys and three holds.
Finally, the forward projections are very enticing. For fiscal 2024, market experts anticipate that earnings per share will hit $3, implying a 206% rise from the year-ago result. On the top line, sales could land at $4.37 billion, up 33.1% from 2023’s print of $3.28 billion.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
