Should I Buy AppLovin (APP)? Finance YouTuber Analysis

The YouTuber suggests buying AppLoven, noting its 48% drop from its peak due to AI replacement fears, which he believes are overblown in the short term. He highlights strong expected revenue growth and a current valuation at 25 times earnings, significantly below its historical average of 90 times, indicating a potential for doubling.

“Over the last four years, shares have traded on average at a price of 90 times its earnings. Now, it's trading at just 25 times this year's forecasted profits. Even back to 50 times on a PE basis, would see this stock double from here.”

AppLovin is presented as a value opportunity due to its strong financial performance (46% revenue growth, 64% earnings growth) despite a 35% stock drop. While acknowledging the execution risk of its conglomerate strategy, the speaker suggests its ability to convert revenue growth into higher earnings makes it attractive. The potential to spin off successful segments is also noted as an opportunity.

“But, I still do like App Love and Ticker A as as one of those one of those stocks that is really performing just on the numbers basis, if not, you know, in a in a competitive advantage idea.”

The YouTuber recommends AppLoving Corporation as a strong 'buy the dip' opportunity, noting its specialization in AI-powered advertising solutions that are boosting growth. He highlights its impressive 70% revenue growth this year (accelerating from a 39% 5-year average) and its exceptional operational leverage, converting this revenue into 120% earnings growth. The company also shows significantly improving profitability metrics across the board.

“Looking at the growth statistics of this company, everything we like to see in a stock, okay, not just a very solid 5-year average revenue growth, 39% a average annualized revenue growth over the last 5 years, increasing that to 70% this year. 70% revenue growth.”

AppLovin is recommended for its strong position in ad tech, with its Axon platform effectively monetizing users for developers and delivering high performance for advertisers and publishers. The company's significant scale and impressive operating margin, which has grown from 19% pre-pandemic to 60% recently, demonstrate its competitive advantage and efficiency in converting revenue into profits, alongside 22% revenue growth.

“This ad tech company's core business is in its Axon platform that helps developers monetize users through its ads.”

The YouTuber recommends AppLovin as one of the best stocks in the tech software space, citing its strong margins and growth rate. It's a stock they are actively accumulating for growth in a bullish market.

“Apploving covered that for its margins and growth rate just the other day. I think this is probably one of the best stocks in the in the software space in the tech software space. Definitely one that I am picking up.”

The YouTuber identifies Applovin as a top pick in the software industry, highlighting its Axon platform's ability to deliver better CPA for advertisers and higher CPMs for publishers, creating a strong competitive advantage through scale. The company demonstrates top 10 profitability, revenue growth (21% annually), and margin improvement (almost 60% operating profit conversion, 40% improvement over 5 years), indicating serious competitive advantages.

“Apploven is not only growing revenue by 21% a year, but converts almost 60% of those sales into operating profits and has improved that operating profitability by 40% over the last 5 years.”

The YouTuber is bullish on Apploving, arguing it's a mispriced ad tech infrastructure company with a powerful AI-driven 'black box' system (Axon 2) that delivers superior results for advertisers. They highlight its elite profit margins (42.3% net, 50.5% FCF), high return on invested capital (64.3%), and efficient sales per employee, indicating a strong, compounding business model that is ditching lower-margin gaming segments. Despite a significant run-up, the YouTuber believes the market still misunderstands its core value proposition and competitive moat.

“My thesis is bullish. The risk is there, no question. But the reward is scaling, and the engine is compounding. That's why I'm looking to buy the stock and plan on selling a cash secured put today.”

The YouTuber recommends AppLovin, a mobile tech company with little competition, for its strong revenue and margin growth. He advises buying only on major dips, citing a recent example where the stock dropped 2% and then bounced back 4%, emphasizing patience for pullbacks in smaller companies.

“This is a stock that I only buy on major dips. And two weeks ago, it happened to drop 2% in just one day. And then of course, it bounced back 4% the next.”

Despite analysts projecting a 0% upside, the YouTuber believes AppLovin will perform well, noting its strong revenue and margin performance. He anticipates a stellar Q4 due to increased marketing spending during that period, which should provide momentum into 2025.

“But this is one that I think the analysts might have this a little wrong and the reason I say that is because when I look at the L earnings they have figured it out with their revenue and their margin and I'm guessing that Q4 is probably going to be Stellar for them due to the simple fact that in the basics of marketing everyone starts spending in Q4 and that should give them some solid momentum going into 2025 for that reason I agree with Congress on this particular pick even though analysts are a little bit less sure”

The YouTuber is buying AppLovin due to its strong financial turnaround, with earnings per share and free cash flow becoming positive and growing. The company's net margins have significantly improved, driven by its software division and strategic use of AI in advertising and marketing, indicating a healthy and growing business.

“when I look at the financials you'll see why I jumped on the stock last year and why I'm still buying it this year their earnings per share had been running negative for years and then last year it finally flipped to be positive and continued to grow each quarter”

The analyst acknowledges AppLovin's strong performance driven by its shift to a software platform and growth in non-gaming sectors like e-commerce, leading to multiple expansion. However, the current valuation (P/E over 100, forward P/E 62, EV/Sales 28) is high, and the analyst questions if the rapid growth rate can be sustained, making it a company to 'keep an eye on' rather than a clear buy.

“I think App 11 has a phenomenal opportunity to grow ahead as there is more e-commerce as there is more opportunities to build these advertising platforms that are outside of the traditional ecosystems but is this rate of growth going to continue we'll have to see because if it doesn't that's going to be the risk for investors.”

The YouTuber highlights AppLovin as a profitable growth stock specializing in mobile ad tech, particularly praising its AI-powered Axon 2 platform. The company has shown strong revenue growth (48% overall, 91% in software) and increased profitability (net profit margin over 22%). With a free cash flow ratio of 23 and a forward P/E of 21, the stock appears undervalued given its growth potential, especially as it expands beyond gaming apps.

“Ich überlege derzeit eine Position aufzubauen und so mein Depot im Bereich ver Werbung neben Alphabet weiter zu diversifizieren”