AppLovin Corporation

(NASDAQ Global Select)
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Somewhat Bullish +45

Are You Overpaying For AppLovin Stock Versus Its Rivals?

Advertising technology Company update AI-generated analysis

📉 AppLovin stock has lost more than half its value over the past year but trades at a lower multiple (20.0x earnings) than rivals Meta Platforms and Magnite.

🚀 The company achieved 60.6% revenue growth over the latest four fiscal quarters, vastly outperforming competitor Magnite's 8.3% growth rate.

💰 AppLovin retains 77.4% of its revenue as operating profit compared to Magnite's 15.6%, demonstrating superior profitability efficiency.

📊 Fiscal Q2 2026 revenue reached $1.92 billion, driven by core gaming business and expansion into the consumer vertical advertising segment.

🛠️ The company opened its Ads Manager platform to the public in fiscal Q2 2026, initially targeting mid-market advertisers where performance is strongest.

📉 Revenue growth is decelerating sequentially, dropping from 68.2% in fiscal Q3 2025 to 52.8% in fiscal Q2 2026.

🔮 Management guides for revenue growth of 46% to 48% in fiscal Q3 2026, anticipating further slowdown as the next model iteration lands.

⚠️ Executives caution that there is no guarantee of gains in every three-month period during the expansion into e-commerce advertisers.

💻 Approximately $0.10 of every extra dollar of revenue goes toward computing power used to train the company's core ad models.

Bullish Signals
  • AppLovin trades at a lower valuation multiple (20.0x earnings) than two of its three main rivals, Meta Platforms and Magnite.
  • The company delivers the fastest revenue growth and widest operating margin among its four-business peer group.
  • AppLovin generated 60.6% revenue growth over the latest four fiscal quarters, significantly outpacing competitor Magnite's 8.3%.
  • Operating profit retention is exceptionally high at 77.4%, compared to just 15.6% for rival Magnite.
  • Revenue of $1.92 billion in fiscal Q2 2026 was credited to improvements in core gaming models and a successful push into the consumer vertical.
Risk Factors
  • Year-over-year revenue growth is slowing sequentially, declining from 68.2% in fiscal Q3 2025 to 52.8% in fiscal Q2 2026.
  • Management expects growth to slow further, guiding for a 46% to 48% increase in revenue for fiscal Q3 2026.
  • The company is not yet well known among e-commerce businesses that do not currently use its advertising service.
  • Executives explicitly stated there is no guarantee of gains in every three-month period as the company expands into new advertiser segments.
Full Analysis
AppLovin (APP) stock has declined over half its value in the past year, currently trading at 20.0 times earnings. Despite this lower valuation compared to peers like Meta Platforms and Magnite, AppLovin leads its peer group of four businesses in both revenue growth and operating margins. The company generates revenue primarily through advertising, with significant contributions from its core gaming business and a newer push into the consumer vertical. Financial performance highlights show AppLovin growing revenue at 60.6% over the latest four fiscal quarters, significantly outpacing rival Magnite's 8.3% growth. While Magnite retains only 15.6% of revenue as operating profit, AppLovin retains 77.4%. The company reported $1.92 billion in revenue for fiscal Q2 2026, driven by improvements to its core ad models and expansion into non-gaming advertisers via its newly public Ads Manager platform. However, growth momentum is showing signs of deceleration. Year-over-year revenue growth has slowed sequentially from 68.2% in fiscal Q3 2025 to 52.8% in fiscal Q2 2026. Management expects this trend to continue, guiding for revenue growth between 46% and 48% in fiscal Q3 2026. Executives note that the next major model improvements landed after Q2 2026, and there is no guarantee of consistent gains in every quarter as they expand into less familiar e-commerce sectors.