u/Yee4614 ·
Reddit — r/ValueInvesting
· August 11, 2026 at 17:10
· ⬆ 18 pts
· 💬 36 comments
| View on Reddit ↗
AI Summary
Summary
Author argues AppLovin’s 50% YTD drop is overdone despite small Q2 guidance/EBITDA misses, citing strong revenue growth, 65% margins, and cheap multiples.
Thesis leans bullish on e-commerce and CTV expansion, with AppLovin’s 2-5x ROAS advantage vs. Google/Amazon as a key moat.
Quality: Data-driven but optimistic DD; relies heavily on management’s explanation for the miss and future TAM assumptions, so it is not a deep-value confirmation.
Score18
Comments36
Upvote %91%
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I can’t see why the market is so down on AppLovin. It is down 50 percent YTD and continuing to drop. I am not diving in yet but it is becoming very compelling to me.
The Q2 results were good. Revenue continued to show explosive growth (small miss to guidance, EPS was solid with small margin improvements, and adj ebita was a small miss. Management addressed this with the model missing an update and this has been deployed.
There is still growth in the gaming market. The TAM is rapidly growing with E-Commerce that showed really strong numbers with 28 percent growth in Q2 (historically slow) compared to Q4 (peak season). CTV is another market that can be exciting down the road.
For a company with 60 percent qoq revenue and 65 percent profit margin, this seems very cheap at at 26 P/E and 18.5 forward PE with a PEG of .59.
I don’t see much competition from other advertisers as AppLovin’s ROAS is 2-5x on mobile games which is comparable to Google and Amazon on their sites. That is a massive different.
So, I am clearly too optimistic atm so someone please poop on this before I dive in.
Q2 revenue growth remained strong, EPS was solid, and the small adj. EBITDA/guidance miss was attributed to a model update; e-commerce grew 28% in a seasonally weak quarter. The 50% YTD selloff looks like a harsh reaction to a minor miss; if growth reaccelerates, the stock could re-rate higher, creating a potential long entry. Author sees an attractive risk/reward but is not yet committed; the sensible move is to watch for proof that growth and margins hold before diving in. Model update fails to restore growth; competition from Google/Amazon intensifies; gaming market slows; e-commerce/CTV ramp disappoints; continued multiple compression.