APP
AppLovin CorpNasdaqValuation snapshot
Above bull casePrice is above even the bull case.
Price as of Aug 17, 2026 · Valuation Aug 13, 2026
What drives APP's base case?
base-case thesisAppLovin's advertising revenue went from $1.84 billion in 2023 to $5.48 billion in 2025, and the first half of 2026 alone was $3.77 billion, up 56%. The company has told investors the September quarter should grow 46-48%, so the near-term picture is anchored by its own forecast rather than guesswork. From there this scenario assumes the growth rate steps down each year in the same orderly way it already has — from 77% a year ago to 53% this June quarter — because a bigger base is simply harder to grow. The finance chief has said profitability should settle a notch below today's record level once higher computing costs are absorbed, so this case holds profits near but slightly under the current mark. The result is a business that is still exceptional today but is treated as an ordinary large advertising platform by the end of the forecast.
What shapes the assumptions
Company guidance of 46-48% growth for the September 2026 quarter
Guided quarterly revenue
Raises revenue growth
Consumer and e-commerce advertiser spend of $1.28B, up 28% versus the seasonal Q4 2025 peak
Non-gaming advertiser spend
Raises revenue growth
CFO guidance that profitability settles in the low-80s on an adjusted basis versus 84% today
Adjusted EBITDA margin
Informs operating margin
Near-zero capital spending — $413 thousand of capex against $1.29B of first-quarter free cash flow
Capital expenditures relative to free cash flow
Lowers reinvestment
Growth of US-sourced e-commerce advertising shrinks the foreign-derived income deduction benefit
Effective tax rate reconciling items
Raises tax rate
Each driver links a business metric to the forecast assumption it shapes — the basis for this case, not investment advice.
Why the gap?
The market is pricing this as if revenue grows 44.7% a year. Over the last 5 years it grew 25.8% a year — so the price assumes more than it has delivered.
What else could explain it?›
- How much of this is timing?
- The price has risen 3.8% since this valuation was struck on 2026-08-13, so some of the gap opened up after these figures were set.
- How confident is this estimate?
- Robustness 54.0/10 (Moderate) — some of any gap is our own uncertainty rather than disagreement.
- What would change the answer?
- Which assumption this valuation swings on, and by how much.
Many combinations of assumptions reproduce the same price. These are ways to read what the market might be expecting, not the market's actual view. How this is worked out
Research & assumptions
Inspect the valuation thesis, cases, risks, evidence, and model inputs.
View details
Research & assumptions
Inspect the valuation thesis, cases, risks, evidence, and model inputs.
Three independently researched cases generated automatically from published financials. Every assumption is justified and cited; the discount rate is computed from researched market inputs.
Base inputs from financials
source period →Base revenue (TTM)
$6.8B
Diluted shares
337,031,000
Net cash
-$461.8M
Bear
medium confidence$98.21
IV / share
-68.9% vs $315.44
- Explicit cash flows
- $42.71
- Terminal value
- $56.87
- Net cash
- -$1.37
- Intrinsic value / share
- $98.21
57.9% of the value rests on the terminal value — elevated dependency.
targetOperatingMargin of 0.7 clamped to [-1, 0.6]
Revenue growth28.0% → 18.0% → 12.0% → 8.0% → 5.0%medium
How derived: Starts from the deceleration already visible in the company's own numbers — quarterly year-over-year growth fell from 77% in Q2 2025 to 53% in Q2 2026 and management guided Q3 2026 to 46-48% — and extends that decay faster than trend on the view that mobile-gaming advertisers, the installed base behind almost all of the $5.48B 2025 revenue, approach their spend ceiling while the e-commerce cohort stalls at pilot scale.
Why this confidence: Company-issued Q3 2026 revenue guidance anchors year one ↑, Four consecutive quarters of observable growth deceleration to extrapolate ↑, Five-year horizon for a business whose growth hinges on unscheduled AI model releases ↓, Only two years of clean post-divestiture advertising-only history ↓
Evidence for
- Q2 2026 revenue of $1,924M grew 53%, down from 66% in Q4 2025 and 77% in Q2 2025 — four consecutive quarters of deceleration in the growth rate.[AppLovin 2Q26 Earnings Press Release]· primary
- Q2 2026 revenue came in below the company's own prior guidance because AXON model improvements slipped, showing growth depends on discrete, hard-to-schedule model releases rather than steady share gains.[APP Q2 FY2026 earnings call transcript]· secondary
- Management said Q3 2026 guidance of $2.055-2.085B assumes only models already live in the business and no additional unreleased model improvements — no embedded uplift from future innovation.[AppLovin sets Q3 2026 outlook (8-K)]· primary
- Management characterised e-commerce advertisers as budgeting one to four quarters ahead with 'mid-market' as the current sweet spot, implying the new vertical ramps slowly and has not yet won large brand budgets.[AppLovin Asks For Patience As It Grows Its Ecommerce Business]· secondary
Evidence against
- Consumer (non-gaming) advertiser spend reached $1.28B in Q2 2026, 28% above the seasonally strongest Q4 2025 level, evidencing a second demand pool still compounding off-season.[APP Q2 2026 earnings call highlights]· secondary
- Even the low end of guided Q3 2026 growth is 46%, far above the 28% first-year rate assumed here.[AppLovin 2Q26 Earnings Press Release]· primary
Operating margin•60.0%medium
How derived: Starts from the reported 77.7% Q2 2026 operating margin plus the CFO's disclosure that each incremental revenue dollar consumes about $0.10 of compute and that Q3 adjusted EBITDA margin steps down to ~83% from 84%, then assumes compute intensity and the cost of serving smaller self-service e-commerce advertisers pushes steady-state margin roughly eight points below today's peak.
Why this confidence: Explicit CFO unit-economics disclosure ($0.10 compute per incremental revenue dollar) ↑, Forward margin guidance issued for the very next quarter ↑, Assumed eight-point compression contradicts the observed two-year expansion trend ↓, Future advertiser mix (self-service vs. managed) is not disclosed ↓
Clamped from 70.0% by the guardrail.
Evidence for
- The company guided Q3 2026 adjusted EBITDA margin down to roughly 83% from 84% in Q2, explicitly citing higher training and compute costs.[AppLovin Q3 margin guidance drops to 83%]· secondary
- CFO Matt Stumpf stated every incremental revenue dollar consumes about $0.10 of compute, capping incremental margin below the current reported level.[APP Q2 2026 earnings call highlights]· secondary
- Sequential flow-through of revenue to adjusted EBITDA was 70% in Q2 2026, below the ~84% average margin, showing incremental economics already dilute the average.[APP Q2 2026 earnings call highlights]· secondary
Evidence against
- Reported operating margin still expanded from 63.9% in Q3 2024 to 77.7% in Q2 2026, and Q2 2026 adjusted EBITDA grew 58% versus 53% revenue growth — margin has widened, not narrowed.[AppLovin 2Q26 Earnings Press Release]· primary
- Management framed the compute step-up as investment in new model development rather than a permanent structural cost, and reiterated margins settling in the low-80s on an adjusted EBITDA basis.[APP Q2 FY2026 earnings call transcript]· secondary
Tax rate22.0%medium
How derived: Starts from the roughly 16% effective rate implied by the disclosed $225.8M Q1 2026 provision against about $1.4B of pretax income, then raises it above the 21% US federal statutory rate on the conservative view that the foreign-derived income deduction and jurisdictional mix creating today's discount erode as OBBBA provisions phase in and state and foreign taxes accumulate.
Why this confidence: Effective rate derivable from filed provision and pretax income ↑, Company discloses the specific drivers of its rate differential ↑, Assumed rate sits above both statutory and actual, requiring a legislative judgment call ↓, Multi-year tax policy path is inherently uncertain ↓
Evidence for
- AppLovin's 10-Q states its 2026 annual effective tax rate differs from the US statutory rate primarily due to jurisdictional mix of earnings and the foreign-derived income deduction — both benefits that can reverse.[AppLovin Q1 2026 Form 10-Q]· primary
- OBBBA revises the FDII/foreign-income deduction regime for US technology companies, reducing the size of the benefit that currently lowers AppLovin's rate.[Navigating OBBBA for the Technology and Life Sciences Industries]· secondary
Evidence against
- Actual recent tax experience is far lower: a $225.8M Q1 2026 provision on roughly $1.4B of pretax income implies about a 16% effective rate, well below the 22% assumed.[AppLovin Q1 2026 Form 10-Q]· primary
- Q2 2026 net income of $1,267M against roughly $1,494M of operating income also implies an effective rate in the mid-teens, not the low twenties.[APP 8-K Ex-99.1 (2Q26)]· primary
Reinvestment rate15.0%medium
How derived: Starts from the disclosed near-zero capital intensity — $413 thousand of capex against $1.29B of Q1 2026 free cash flow — but sets reinvestment well above that as a share of after-tax operating profit, because a decelerating platform would have to buy growth through acquisitions and owned training compute rather than renting it.
Why this confidence: Capex and free cash flow are directly disclosed each quarter ↑, Assumption departs sharply from the observed asset-light spending pattern ↓, Future compute ownership vs. rental decisions are not disclosed ↓, Acquisition cadence is discretionary and unforecastable ↓
Evidence for
- Management flagged higher training and compute costs as a Q3 2026 margin headwind, indicating the AI ad engine requires escalating ongoing investment to stay competitive.[AppLovin Q3 margin guidance drops to 83%]· secondary
- AppLovin's history of acquiring capability (MoPub, Adjust and the gaming studios it later divested) shows the platform has repeatedly needed inorganic spend to expand its addressable market.[AppLovin FY2025 Form 10-K]· primary
Evidence against
- Reported capital expenditures are negligible — $413 thousand in Q1 2026 against $1.29B of free cash flow — so on observed spending the required reinvestment rate is near zero.[AppLovin Q1 2026 Form 10-Q]· primary
- AppLovin returned capital rather than reinvesting it, repurchasing and withholding 1.1 million shares for $551.3 million in Q2 2026 — behaviour inconsistent with a heavy reinvestment need.[APP 8-K Ex-99.1 (2Q26)]· primary
Terminal growth2.0%medium
How derived: Starts from the 4.69% 10-year Treasury yield as the theoretical cap on perpetual nominal growth and sets terminal growth well below it, at roughly the inflation objective with no real growth, on the view that a mature mobile-advertising intermediary faces platform-owner disintermediation and grows no faster than prices.
Why this confidence: Anchored to an observable, dated Treasury yield ceiling ↑, Supported by company-disclosed platform-dependency risk factors ↑, Perpetual assumptions are unverifiable by nature ↓
Evidence for
- AppLovin's 10-K risk factors disclose dependence on third-party mobile platforms (Apple and Google) and on privacy/identifier policies it does not control, constraining long-run pricing and volume power.[AppLovin FY2025 Form 10-K]· primary
- The 10-year Treasury yield of 4.69% sets the ceiling on a sustainable perpetual nominal growth rate; 2.0% leaves ample cushion.[Federal Reserve H.15 Selected Interest Rates]· primary
Evidence against
- Digital advertising has grown well above general inflation, and AppLovin compounded advertising revenue from $1.84B in 2023 to $5.48B in 2025, making a zero-real-growth terminal rate a severe assumption.[AppLovin 2Q26 Earnings Press Release]· primary
Base
medium confidence$159.40
IV / share
-49.5% vs $315.44
- Explicit cash flows
- $59.56
- Terminal value
- $101.21
- Net cash
- -$1.37
- Intrinsic value / share
- $159.40
63.5% of the value rests on the terminal value — elevated dependency.
targetOperatingMargin of 0.76 clamped to [-1, 0.6]
Revenue growth38.0% → 28.0% → 22.0% → 17.0% → 13.0%medium
How derived: Starts from the guided Q3 2026 growth of 46-48% on top of H1 2026 revenue of $3.77B (up 56%), then applies a steady law-of-large-numbers decay matching the observed pattern of roughly 10-15 points of deceleration per year as the $6.83B trailing base compounds and the newer consumer-advertiser cohort matures into an ordinary large business.
Why this confidence: Year one is bracketed by explicit company revenue guidance ↑, Three years of consistent, observable deceleration to fit the decay curve ↑, Second growth vector quantified by management ↑, Years three to five rest on an assumed decay shape, not disclosure ↓, Growth is tied to unscheduled AI model releases that already caused one miss ↓
Evidence for
- Q3 2026 guidance of $2.055-2.085B implies 46-48% year-over-year and 7-8% sequential growth, supporting a high-30s first forward year off the trailing base.[AppLovin sets Q3 2026 outlook (8-K)]· primary
- First-half 2026 revenue of $3.77B was up 56% year over year, so the business entered the forecast window growing well above the assumed first-year rate.[AppLovin 2Q26 Earnings Press Release]· primary
- Consumer advertiser spend of $1.28B in Q2 2026 stood 28% above the seasonal Q4 2025 peak, evidencing a genuine second growth vector beyond mobile gaming.[APP Q2 2026 earnings call highlights]· secondary
- Management said advertisers have not reached their maximum spend for the returns they are getting and typically raise budgets one to four quarters out, implying committed forward demand.[AppLovin Asks For Patience As It Grows Its Ecommerce Business]· secondary
Evidence against
- Q2 2026 revenue missed the company's own guidance range because model improvements were delayed, showing the forecast path is not smoothly controllable.[APP Q2 FY2026 earnings call transcript]· secondary
- Advertising revenue was only $1.84B in 2023 before the AXON step-change, showing this business has historically moved in discontinuities rather than smooth decay.[AppLovin FY2025 Form 10-K]· primary
Operating margin•60.0%high
How derived: Starts from the reported 77.7% Q2 2026 operating margin and 84% adjusted EBITDA margin — a roughly six-point gap for stock compensation and amortization — and applies the CFO's stated expectation that adjusted EBITDA margin settles in the low-80s over time, which translates to a reported operating margin in the mid-70s.
Why this confidence: Explicit CFO statement on the steady-state margin level ↑, Assumption sits below, not above, currently reported margins ↑, Eight consecutive quarters of disclosed operating margins to trend ↑, Compute cost inflation is an open-ended input variable ↓
Clamped from 76.0% by the guardrail.
Evidence for
- CFO Matt Stumpf said margins should remain in the low-80s on an adjusted EBITDA basis over time — direct management framing of the steady state.[APP Q2 2026 earnings call highlights]· secondary
- Reported operating margin was 77.7% in Q2 2026 and 78.2% in Q1 2026, so the assumed 76% sits just below demonstrated, currently sustained profitability.[AppLovin 2Q26 Earnings Press Release]· primary
- Q2 2026 adjusted EBITDA grew 58% against 53% revenue growth, with margin expanding roughly 300 basis points year over year.[APP 8-K Ex-99.1 (2Q26)]· primary
Evidence against
- Q3 2026 guided adjusted EBITDA margin of about 83% is a step down from 84%, and sequential flow-through was only 70% in Q2, showing incremental margins run below the average.[AppLovin Q3 margin guidance drops to 83%]· secondary
- Operating margin was only 62.9% as recently as Q4 2024, so the current level reflects a recent, rapid expansion rather than a long-established plateau.[AppLovin FY2025 Form 10-K]· primary
Tax rate19.0%medium
How derived: Starts from the roughly 16% effective rate implied by the disclosed $225.8M Q1 2026 provision on about $1.4B of pretax income and lifts it modestly toward the 21% federal statutory rate, since the company attributes its discount to jurisdictional mix and the foreign-derived income deduction — benefits that shrink proportionally as US-sourced e-commerce advertising grows.
Why this confidence: Provision and pretax income both disclosed in filed statements ↑, Company names the specific reconciling items driving its rate ↑, Convergence toward statutory over five years is a judgment, not disclosure ↓
Evidence for
- The 10-Q states the 2026 annual effective rate differs from the US statutory rate due to jurisdictional mix of earnings and the foreign-derived income deduction, confirming the underlying rate is anchored near statutory.[AppLovin Q1 2026 Form 10-Q]· primary
- US federal statutory corporate tax is 21% and AppLovin is a US-domiciled corporation headquartered in California, adding state tax on domestic income.[AppLovin FY2025 Form 10-K]· primary
Evidence against
- Actual reported taxes run lower: the $225.8M Q1 2026 provision implies about 16%, and Q2 2026 net income of $1,267M against roughly $1,494M operating income implies a similar mid-teens rate.[AppLovin Q1 2026 Form 10-Q]· primary
Reinvestment rate10.0%medium
How derived: Starts from the disclosed asset-light reality — $413 thousand of capital expenditure supporting $1.29B of Q1 2026 free cash flow — and sets a low double-digit share of after-tax operating profit to cover working capital growth from a rapidly expanding receivables base, periodic bolt-on acquisitions, and any owned training infrastructure the AI roadmap requires.
Why this confidence: Capex and free cash flow disclosed quarterly with the definition stated ↑, Post-divestiture the business is structurally software-only ↑, Working-capital intensity of a fast-scaling receivables base is not separately disclosed ↓, Future M&A and owned-compute decisions are discretionary ↓
Evidence for
- Q1 2026 capital expenditures were just $413 thousand against $1.29B of free cash flow, confirming a near-zero fixed-asset requirement.[AppLovin Q1 2026 Form 10-Q]· primary
- AppLovin defines free cash flow as operating cash flow less purchases of property and equipment and finance-lease principal, and those deductions are immaterial to the total.[AppLovin 2Q26 Earnings Press Release]· primary
- The company divested its mobile-gaming apps business, narrowing it to a software-only advertising platform with no studio production spend.[AppLovin FY2025 Form 10-K]· primary
Evidence against
- Management flagged rising training and compute costs for Q3 2026, which could shift from rented operating expense toward capitalised infrastructure and raise the true reinvestment need.[AppLovin Q3 margin guidance drops to 83%]· secondary
Terminal growth3.0%medium
How derived: Starts from the 4.69% 10-year Treasury yield as the ceiling on perpetual nominal growth and sets terminal growth meaningfully below it, at roughly long-run nominal GDP, reflecting a mature advertising platform that grows with the economy plus a modest continuing shift of budgets toward performance channels.
Why this confidence: Anchored to an observable, dated Treasury yield ceiling ↑, Set at economy-like growth rather than a company-specific claim ↑, Perpetual assumptions cannot be verified against disclosure ↓
Evidence for
- The 10-year Treasury yield of 4.69% comfortably exceeds a 3.0% perpetual nominal growth rate, satisfying the constraint that terminal growth cannot exceed the risk-free rate.[Federal Reserve H.15 Selected Interest Rates]· primary
- AppLovin serves both mobile gaming and a growing consumer/e-commerce advertiser base, giving exposure to two categories that historically grow at least with nominal GDP.[AppLovin FY2025 Form 10-K]· primary
Evidence against
- The 10-K discloses dependence on Apple and Google platform rules and privacy identifiers, a structural risk that could cap long-run growth below economy-wide rates.[AppLovin FY2025 Form 10-K]· primary
Bull
low confidence$238.89
IV / share
-24.3% vs $315.44
- Explicit cash flows
- $79.43
- Terminal value
- $160.83
- Net cash
- -$1.37
- Intrinsic value / share
- $238.89
67.3% of the value rests on the terminal value — elevated dependency.
targetOperatingMargin of 0.8 clamped to [-1, 0.6]
Revenue growth48.0% → 38.0% → 30.0% → 24.0% → 18.0%medium
How derived: Starts from the guided Q3 2026 growth of 46-48% — which management said assumes only models already deployed and no benefit from unreleased improvements — and holds growth near that guided rate before decaying slowly, on the view that the $1.28B quarterly consumer-advertiser cohort scales into a second business comparable in size to gaming.
Why this confidence: Company guidance explicitly excludes unreleased model upside, creating a documented floor ↑, Second growth vector quantified by management at $1.28B and growing ↑, Path requires growth above the company's own guided rate in year one ↓, Five years of sustained high growth is unprecedented at this revenue scale ↓
Evidence for
- Management stated Q3 2026 guidance assumes only model improvements already live in the business and does not assume additional model releases — an explicitly conservative baseline leaving upside unmodelled.[AppLovin sets Q3 2026 outlook (8-K)]· primary
- Consumer advertiser spend reached $1.28B in Q2 2026, 28% above the seasonally strongest Q4 2025 level, showing the non-gaming vertical compounding rapidly off a meaningful base.[APP Q2 2026 earnings call highlights]· secondary
- Management said advertisers have not reached their maximum spend for the return they are getting, and described distribution deals with third-party e-commerce analytics providers to source advertisers at scale.[AppLovin Asks For Patience As It Grows Its Ecommerce Business]· secondary
- The company already demonstrated a step-change once: advertising revenue rose 96% in 2024 and 52% in 2025 after the AXON engine was deployed.[AppLovin FY2025 Form 10-K]· primary
Evidence against
- Q2 2026 revenue missed the company's own guidance because model improvements were delayed and shares fell 16-20% — direct evidence sustained high growth is not assured.[APP Q2 FY2026 earnings call transcript]· secondary
- Guided Q3 2026 growth of 46-48% is already below the assumed first forward year, and the growth rate has declined in each of the last four quarters.[AppLovin 2Q26 Earnings Press Release]· primary
- Management described mid-market as the current e-commerce sweet spot and said those advertisers set budgets one to four quarters ahead, implying a slow ramp cadence.[AppLovin Asks For Patience As It Grows Its Ecommerce Business]· secondary
Operating margin•60.0%medium
How derived: Starts from the reported 77.7% Q2 2026 operating margin and 84% adjusted EBITDA margin — up roughly 300 basis points year over year — and assumes the expansion from 62.9% in Q4 2024 continues modestly, because a software auction platform spreads fixed model-training costs over a much larger revenue base as the consumer vertical scales.
Why this confidence: Six quarters of disclosed, steadily rising operating margins ↑, Post-divestiture business mix is structurally higher-margin ↑, Assumption sits above management's own stated steady-state range ↓, Compute cost trajectory is an open-ended external input cost ↓
Clamped from 80.0% by the guardrail.
Evidence for
- Operating margin expanded from 62.9% in Q4 2024 to 77.7% in Q2 2026 — nearly 15 points in six quarters — demonstrating strong operating leverage.[AppLovin 2Q26 Earnings Press Release]· primary
- Q2 2026 adjusted EBITDA rose 58% on 53% revenue growth, with margin up about 300 basis points year over year — profit still growing faster than revenue.[APP 8-K Ex-99.1 (2Q26)]· primary
- Divesting the capital- and labour-intensive mobile gaming studios left a pure software platform with structurally higher margins than the pre-2025 mix.[AppLovin FY2025 Form 10-K]· primary
Evidence against
- The CFO said margins should remain in the low-80s on adjusted EBITDA over time — roughly mid-70s on a reported operating basis — below the 80% assumed here.[APP Q2 2026 earnings call highlights]· secondary
- Q3 2026 adjusted EBITDA margin was guided down to about 83% on higher training and compute costs, and Q2 sequential flow-through was only 70%.[AppLovin Q3 margin guidance drops to 83%]· secondary
Tax rate16.0%medium
How derived: Starts directly from the company's demonstrated effective rate — a $225.8M Q1 2026 provision against roughly $1.4B of pretax income, about 16% — and holds it, on the view that the jurisdictional earnings mix and foreign-derived income deduction the company cites remain available as international advertising demand grows alongside domestic.
Why this confidence: Assumption equals the rate implied by two filed quarterly statements ↑, Company discloses the structural drivers of its rate discount ↑, Assumes no adverse tax-law change over five years ↓
Evidence for
- The disclosed Q1 2026 tax provision of $225.8M on roughly $1.4B of pretax income implies an effective rate near 16%, matching the assumption.[AppLovin Q1 2026 Form 10-Q]· primary
- Q2 2026 net income of $1,267M against roughly $1,494M of operating income corroborates a mid-teens effective rate.[APP 8-K Ex-99.1 (2Q26)]· primary
- The company attributes its sub-statutory rate to jurisdictional mix of earnings and the foreign-derived income deduction — structural features of its international advertising business, not one-off items.[AppLovin Q1 2026 Form 10-Q]· primary
Evidence against
- OBBBA revises the FDII/foreign-income deduction regime for US technology companies, which could raise AppLovin's rate toward the 21% federal statutory level over the forecast horizon.[Navigating OBBBA for the Technology and Life Sciences Industries]· secondary
Reinvestment rate6.0%medium
How derived: Starts from the disclosed $413 thousand of Q1 2026 capital expenditure against $1.29B of free cash flow and keeps reinvestment minimal, since the company revealed its own view of its capital needs by spending $551.3 million on buybacks in Q2 2026 rather than on growth assets.
Why this confidence: Capex, free cash flow and buybacks all directly disclosed ↑, Balance sheet at 0.1x net leverage removes any funding constraint ↑, Assumes very high growth is achievable with near-zero invested capital ↓, Working-capital needs of a rapidly scaling receivables base not separately disclosed ↓
Evidence for
- Q1 2026 capital expenditures were $413 thousand against $1.29B of free cash flow — capital intensity is effectively zero.[AppLovin Q1 2026 Form 10-Q]· primary
- AppLovin repurchased and withheld 1.1 million shares for $551.3 million in Q2 2026 with about $1.8 billion remaining authorised, showing management sees surplus rather than scarce capital.[APP 8-K Ex-99.1 (2Q26)]· primary
- Net leverage was roughly 0.1 times trailing twelve-month adjusted EBITDA at quarter end, so growth need not be funded out of retained profits.[APP 8-K Ex-99.1 (2Q26)]· primary
Evidence against
- Management identified higher training and compute costs as a live Q3 2026 headwind, so the AI ad engine does require growing investment even if it currently runs through the income statement rather than capex.[AppLovin Q3 margin guidance drops to 83%]· secondary
Terminal growth3.8%low
How derived: Starts from the 4.69% 10-year Treasury yield as the hard cap on perpetual nominal growth and sets terminal growth below but close to that ceiling, at nominal GDP plus a premium, on the view that performance advertising keeps taking share from traditional media indefinitely.
Why this confidence: Bounded by an observable, dated Treasury yield ceiling ↑, Rate exceeds plausible long-run nominal GDP growth ↓, No company disclosure speaks to perpetual growth ↓, Terminal value is highly sensitive to this input ↓
Evidence for
- The 10-year Treasury yield of 4.69% exceeds 3.8%, so the assumption still satisfies the constraint that perpetual growth cannot exceed the risk-free rate.[Federal Reserve H.15 Selected Interest Rates]· primary
- AppLovin's expansion beyond mobile gaming into consumer and e-commerce advertising — $1.28B of quarterly spend — broadens the addressable market it can grow with indefinitely.[APP Q2 2026 earnings call highlights]· secondary
Evidence against
- The 10-K discloses dependence on Apple and Google platform and privacy policies, a structural constraint on indefinitely outgrowing the economy.[AppLovin FY2025 Form 10-K]· primary
- A terminal rate above long-run nominal GDP implies the company grows forever faster than the economy, which no firm can sustain indefinitely.[Federal Reserve H.15 Selected Interest Rates]· primary
Valuation robustness
reliability of the estimate, not a stock rating54 / 100 · Moderate
Formula v1.0.0. Higher means a more reliable estimate — not a recommendation.
Per-share economics
Business growth after changes in the diluted share count.
| Period | Revenue growth | FCF/share | FCF/share growth | Shares | Share growth |
|---|---|---|---|---|---|
| Q3 2024 | -3.4% | — | — | 348.23M | -2.4% |
| Q1 2025 | 9.5% | — | — | 344.88M | -1.1% |
| Q2 2025 | 77.0% | — | — | 342.19M | -1.7% |
| Q3 2025 | 68.2% | — | — | 340.97M | -2.1% |
| Q1 2026 | 59.0% | — | — | 338.73M | -1.8% |
| Q2 2026 | 52.8% | — | — | 337.03M | -1.5% |
Valuation history every run
History builds as the valuation is recalculated — this is the first recorded run.
Market inputs researched
Uses the 10-year US Treasury constant-maturity yield of 4.69% reported for August 12, 2026, the standard risk-free proxy matched in duration to a long-dated equity cash-flow stream.
Uses the published five-year monthly regression beta of 2.53 for APP against the market, reflecting the stock's realised volatility as a high-growth, high-multiple advertising platform.
Uses Damodaran's forward-looking implied US equity risk premium of 4.42% computed from the S&P 500 at 7,499.36 on July 1, 2026, preferred over historical averages because it reflects currently priced expected returns.
Uses the quoted APP share price of $310.20 on August 13, 2026, following the post-Q2-earnings decline from the $318.68 close on August 11.
Starts from the roughly 5.4% weighted average coupon on AppLovin's $3.55B senior notes (5.125% due 2029, 5.375% due 2031, 5.500% due 2034, 5.950% due 2054) and adds a small allowance for the higher prevailing 10-year Treasury yield, giving a current pre-tax cost of debt near 5.5% for this BBB- rated issuer.
Generated 8/13/2026, 11:20:48 AM · pipeline v1.1.0