AppLovin
| CURRENT PRICE | PROBABILITY-WEIGHTED FAIR VALUE | FAIR VALUE RANGE |
|---|---|---|
| ~$342 | ~$415 | $300 – $520 |
| Aug 6, 2026, ~−18% on the print — confirm on live feed | House view: Elite margins, expectations reset | EPS beat, small revenue miss; big run unwound |
New coverage · August 2026: AppLovin reported Q2 2026 after the close on August 5, 2026. Figures below are verified against the company's SEC Form 8-K (Item 2.02) earnings release[1]; analyst actions and estimate beats/misses are from Benzinga Pro[2].
House View: Best-in-class economics, priced for perfection (August 2026). The business is extraordinary; the stock just met an extraordinary bar. Q2 revenue of $1.924B grew 53% YoY but missed the ~$1.935B consensus by a hair — and against a stock that had run to ~$418, a top-line miss of any size was enough to trigger an ~18% drop to ~$342. The rest of the print was elite: net income $1.27B (66% net margin), adjusted EBITDA $1.61B at an 84% margin, free cash flow $863M, and GAAP EPS of $3.76 that beat the $3.67 estimate. Management framed the revenue shortfall as a timing issue (an AI-model transition in the ad engine) and guided Q3 to $2.055–2.085B — roughly in line with the ~$2.068B Street and implying re-acceleration. The sell-side cut targets hard but largely kept the faith: Goldman to $465 (Neutral), Needham to $500 (Buy), B of A to $430 (Buy), BTIG to $574 (Buy), while Wells Fargo downgraded to Equal-Weight at $357. At ~$342 the stock trades around ~14x forward sales and ~17x forward EBITDA for a business compounding revenue >50% at 84% EBITDA margins — not cheap, but far from the peak. Our base (~$420) sits within the post-cut Street range and above the reset tape, reflecting a view that the miss was timing rather than a break in the model; the bear (~$300) respects AppLovin's history of elevated scrutiny (ad measurement, short-seller reports) and how violently a high-multiple name moves on any wobble.
CURRENT SNAPSHOT
| Metric | Value | Notes / Source |
|---|---|---|
| Stock price | ~$342 | Aug 6, 2026, ~−18% on the print (prev close ~$418) [3] |
| Market cap | ~$115B | ~335M shares × ~$342 [1] |
| Q2 2026 revenue | $1.924B (+53% YoY) | Missed ~$1.935B estimate [2] |
| Q2 2026 EPS | $3.76 diluted | Beat $3.67 estimate [2] |
| Net income / margin | $1.27B / 66% | +55% YoY [1] |
| Adjusted EBITDA / margin | $1.61B / 84% | +58% YoY [1] |
| Free cash flow | $863M (Q2) | OCF $869M [1] |
| Cash / debt | $3.05B cash / $3.52B debt | Repurchased $551M stock in Q2 [1] |
| Q3 2026 guidance | Rev $2.055–2.085B; Adj EBITDA $1.71–1.74B | ~In line with $2.068B est; 83% margin [1] |
| Street PTs (post-print) | ~$357 – $574 | Goldman $465, Needham $500, BofA $430, BTIG $574, WF $357 [2] |
BULL / BASE / BEAR SCENARIOS
AppLovin is valued on the durability of its ad-engine growth and its exceptional FCF conversion. Scenarios flex the FY27 revenue/EBITDA trajectory and the multiple the market pays for a >40%-grower at ~84% EBITDA margins. Weights: Bull 25% / Base 50% / Bear 25%.
| Scenario (weight) | Driver | Approx. multiple | Fair value |
|---|---|---|---|
| Bull (25%) | AXON/ad engine keeps growth >40%; e-commerce and new verticals scale; premium multiple holds | ~22x FY27E EBITDA | ~$520 |
| Base (50%) | Growth normalizes to 30s%, margins stay ~80%+; multiple settles as the stock digests the reset | ~18x FY27E EBITDA | ~$420 |
| Bear (25%) | Growth decelerates, ad-measurement/scrutiny pressure, multiple compresses | ~12x FY27E EBITDA | ~$300 |
| Probability-weighted | — | — | ~$415 |
Probability-weighted fair value ~$415, ~21% above the ~$342 post-print tape. The economics (53% growth, 84% EBITDA margin, ~$3.5B annual FCF) justify a value well above the reset level if the Q2 miss was truly timing; the wide $300–$520 range reflects both AppLovin's multiple sensitivity and the elevated headline risk that has historically attached to the name.
Key Risks & Watch Points
- Expectations / multiple: The stock trades on a premium multiple after a huge run; even small revenue wobbles produce outsized moves, as this print showed.
- Growth durability: The ad engine (AXON) drives the model; any slowdown in advertiser demand or model efficiency directly hits growth.
- Headline / scrutiny risk: AppLovin has been a repeated short-seller target (ad-attribution and data-practice allegations); a credible new report is a tail risk.
- Concentration & e-commerce ramp: Newer verticals (e-commerce) are the next leg; execution there is unproven at scale.
- Leverage: ~$3.5B of debt is modest against the FCF, but worth monitoring alongside the aggressive buyback.
What Would Change Our View
- Upside: Q3 revenue re-accelerating in line with or above guidance, confirming the “timing” explanation; e-commerce traction; continued 80%+ EBITDA margins.
- Downside: A second straight revenue miss, evidence the deceleration is structural, a credible short report, or a broad de-rating of high-multiple growth.
Sources
[1] SEC Form 8-K (Item 2.02), AppLovin Q2 2026 earnings release, filed Aug 5, 2026 — sec.gov/Archives/…/exhibit991-2q26earningspre.htm
[2] Benzinga Pro — AppLovin news feed & analyst actions (Q2 EPS $3.76 beat $3.67; rev $1.924B miss $1.935B est; Q3 guide $2.055–2.085B vs $2.068B est; post-print PT cuts: Goldman Neutral $465, Needham Buy $500, B of A Buy $430, BTIG Buy $574, Wells Fargo downgrade to Equal-Weight $357) — pro.benzinga.com
[3] https://finance.yahoo.com/quote/APP/
Disclaimer
This output is for informational and research-assistance purposes only. It does not constitute investment, legal, tax, accounting, or other professional advice, and it is not a recommendation to buy, sell, or hold any security or instrument or to pursue any strategy. Information may be incomplete, estimated, delayed, or inaccurate. Past performance does not guarantee future results. Verify material facts independently and consult qualified advisors before making decisions.