Latest news with #shortsellers
Yahoo
22-05-2025
- Business
- Yahoo
Planet Fitness (PLNT) Upgraded by Stifel With $120 Target
Planet Fitness (PLNT, Financials) got a boost after Stifel upgraded the stock to buy from hold and raised its price target to $120 from $82, pointing to steady membership growth and long-term sales potential. The stock rose 1.4% in premarket trading, nearing its record high of $109.91. It's up 59% over the past year but just 5.3% so far in 2024. If gains hold, this would mark its sixth straight daily advance. Short interest has climbed nearly 28% in two weeks, now making up 8% of the float. At current volumes, it would take over four days for short sellers to cover. That's setting the stage for a possible squeeze. Options traders are still cautious. A high put/call ratio suggests plenty of bearish bets, which could unwind and add to the upside if sentiment shifts. See insider trades. Peter Lynch chart. This article first appeared on GuruFocus.
Yahoo
17-05-2025
- Business
- Yahoo
This Billionaire Just Bet Big on a Controversial AI Stock. Should You?
AppLovin's technology has come under scrutiny from short sellers. However, renowned tech investor Chase Coleman initiated a new position in the stock last quarter. The company has been seeing tremendous growth and trades at a reasonable valuation. These 10 stocks could mint the next wave of millionaires › AppLovin (NASDAQ: APP) has been a lightning rod for controversy recently, with three separate short sellers issuing bearish reports on the company this year. However, one billionaire investor was clearly unconvinced by the reports, making AppLovin stock the largest new position in his portfolio during the first quarter. Billionaire Chase Coleman of Tiger Global Management bought nearly $575 million worth of AppLovin stock last quarter, the most he bought of any stock in the period. The stock now represents a 1.7% position and is his 16th-largest holding. Coleman is a highly successful, growth-oriented investor specializing in tech stocks who generally takes a long-term view. He tends to maintain a concentrated portfolio and isn't afraid to be aggressive. As such, his purchase of AppLovin stock is a big vote of confidence in the stock. Investors like Coleman have a lot of resources and connections, and he surely did his due diligence before investing. AppLovin's core business is an advertising platform that gaming app companies use to help them attract and better monetize users. It also owns a legacy portfolio of gaming apps that it is currently in the process of selling. The introduction of its Axon 2 artificial intelligence (AI)-based advertising technology in the second quarter of 2023 helped transform the company and set it on a path of huge revenue growth. According to the company, the AI-advertising engine uses predictive machine learning to improve ad targeting, bidding, and ad placement. Its goal is to find gamers most likely to download apps or engage with an ad. Meanwhile, Axon 2 helps predict which ads will yield the highest return on ad spending budgets. However, not everyone is buying into what Axon 2 does. Short sellers have basically accused AppLovin of installing apps onto users' devices without their permission. This would be a serious violation of most app stores, which could lead to its software getting banned on these platforms. AppLovin has denied the allegations and even hired lawyers to investigate the short sellers. CEO Adam Foroughi said the complexity of Axon 2.0's technology has allowed short sellers to "stir fear and doubt," and he told investors to "dig deeper." Coleman apparently took up Foroughi's challenge to dig deeper, leading to his sizable investment in the company's stock. While there have been some questions around Axon 2's technology, there is no question that it has led to tremendous growth for the company. In 2022, the year before AppLovin launched Axon 2, the company generated $2.8 billion in revenue. Two years later, in 2024, its revenue had grown to $4.7 billion. That growth continued into the first quarter of this year, with AppLovin's revenue climbing 40% to $1.48 billion. Meanwhile, its advertising revenue surged 70% to $1.16 billion. Not only has Axon 2 led to strong revenue growth, it has also greatly improved the company's gross margin, which lead to greater profitability. In 2022, its gross margin was 55.4%, while in 2024 it had risen to 75.2%. The gross margin expansion also continued into Q1, rising to 81.7% from 72.2% a year earlier. It's also worth noting that AppLovin's success has seemingly come at the expense of rival Unity Software, whose adtech business (its growth solutions segment) lost revenue in 2024 and Q1 2025. So AppLovin is not riding an industry tailwind; its solution is taking market share and customers away from competitors. Longer term, AppLovin has talked about revenue growth from gaming customers settling into the 20% to 30% range. This would come from algorithm improvements and the natural growth of the gaming app industry. However, the company thinks that Axon 2's more predictive nature and increased use of automation can help it expand beyond its core gaming clients. It is currently testing the solution within the e-commerce vertical and expects it to have a meaningful contribution this year. Despite the stock posting some huge gains over the past two years, its valuation is still reasonable with a forward price-to-earnings (P/E) ratio of just under 45 times and a price/earnings-to-growth (PEG) ratio of 0.56 times. A PEG ratio below 1 is typically viewed as undervalued. While the short-seller accusations against the company are a bit scary, purchases of the stock by an investor as renowned as Coleman should help allay those fears. As such, I think given AppLovin's growth opportunities and current valuation, investors can take a small position in the stock at current levels. Ever feel like you missed the boat in buying the most successful stocks? Then you'll want to hear this. On rare occasions, our expert team of analysts issues a 'Double Down' stock recommendation for companies that they think are about to pop. If you're worried you've already missed your chance to invest, now is the best time to buy before it's too late. And the numbers speak for themselves: Nvidia: if you invested $1,000 when we doubled down in 2009, you'd have $351,127!* Apple: if you invested $1,000 when we doubled down in 2008, you'd have $40,106!* Netflix: if you invested $1,000 when we doubled down in 2004, you'd have $642,582!* Right now, we're issuing 'Double Down' alerts for three incredible companies, available when you join , and there may not be another chance like this anytime soon.*Stock Advisor returns as of May 12, 2025 Geoffrey Seiler has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends AppLovin and Unity Software. The Motley Fool has a disclosure policy. This Billionaire Just Bet Big on a Controversial AI Stock. Should You? was originally published by The Motley Fool
