
AppLovin [APP] has been on a historic tear. Up more than 460% over the past year, the mobile marketing software firm has outperformed almost every major tech stock.
And while skeptics point to a stretched valuation or modest revenue beats, the reality is that AppLovin may be just getting started.
The stock dipped slightly after its latest earnings report, but the numbers told a different story: earnings blew past expectations, margins widened, and guidance moved higher.
Management is signaling strong demand and operating leverage, and that’s before its next wave of AI-powered tools and monetization features go live.
The market’s tepid reaction says more about short-term expectations than long-term potential.
With a near-unmatched free cash flow margin, a sticky customer base, and a still-evolving product suite, AppLovin’s momentum has plenty of room to run.

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Strategic Positioning: Owning the Pipes of Mobile Ads
AppLovin is no longer just a behind-the-scenes adtech company. It now runs a full-stack ecosystem that connects advertisers and publishers across mobile apps, connected TV, and even e-commerce.
At the core of its growth story is the AXON engine, a proprietary optimization platform that matches ad inventory with the highest-performing marketing placements in real time.
AppLovin’s platform has become indispensable to mobile developers and performance marketers. Products like MAX (in-app bidding), Adjust (analytics), and AppDiscovery (targeting) are deeply integrated into the monetization workflows of top-tier apps.
The company also recently completed its divestiture of 10 mobile gaming studios to Tripledot for $400 million and a 20% equity stake, sharpening its focus squarely on adtech and marketing software.
That sale helps clarify its business model and could unlock better valuation multiples over time.
And while the company isn’t a household name, it increasingly powers the mobile experiences of those that are.

Poll: Is AppLovin’s run just getting started—or nearly out of steam?

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Momentum Meets Execution
The second quarter was another proof point. Revenue grew 17% year-over-year to $1.26 billion, narrowly missing Wall Street estimates by $10 million, but EBITDA of $1.02 billion and EPS of $2.39 trounced forecasts.
Free cash flow margin hit 61%. Operating margin hit 76.1%. These are enterprise SaaS-style margins for a company with only a fraction of the enterprise baggage.
The market initially shrugged. Shares dropped ~4% in after-hours trading. But then came the rebound, as investors processed the third-quarter outlook: revenue of $1.33 billion and EBITDA of $1.08 billion, both above consensus.
And then there’s the customer payback period, just 3.9 months. That metric is staggering for a company this size and speaks volumes about its ROI for clients.
Yes, growth is moderating a bit. But so what? That’s a result of the law of large numbers, not a broken model.

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Action Plan: Buy the Dip Before Q4 Tools Launch
AppLovin has already signaled a major self-serve product launch in Q4 2025, which could be a significant catalyst for revenue reacceleration.
These tools are expected to bring smaller advertisers directly onto the platform, further improving monetization and reducing reliance on managed service deals.
That could be the moment the next leg of the rally begins. For investors looking to get in before the crowd, this slight pullback may be the best setup you’ll get.
Accumulating shares between $370–$390 offers exposure near the 50-day moving average, just as new demand builds around the launch.

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Risks: Slowing Growth and Competitive Pressure
No momentum story is without risk.
AppLovin’s growth rate is slowing, sales grew 17% year over year, but that’s down from 22% in Q1 and 28% in Q2 last year. Guidance for Q3 implies 13.3% growth. If that trend continues, investor patience could wear thin.
Competition is also heating up. Meta, Alphabet, and a host of smaller adtech players are building increasingly sophisticated targeting and AI infrastructure. If
AppLovin fails to stay ahead on performance or attribution, its moat could weaken.
And while AI is core to AppLovin’s pitch, some investors may want to see more tangible monetization results before assigning higher valuations. The company’s P/E ratio remains above 70, leaving little room for execution missteps.
Finally, the company carries a high debt-to-equity ratio (~6.1). While cash flow supports it for now, any deterioration in margins or macro conditions could create balance sheet pressure.

How to Position Now: Lean In With Triggers on Deck
Despite the risks, AppLovin’s setup is still compelling.
The stock is consolidating after a historic run, forming a base near $390 with technical resistance around $430.
A breakout above that level, especially on substantial volume after its Q3 product rollouts, could propel the stock back toward its 52-week high of $525.
Institutions remain bullish. Citi, Morgan Stanley, and Piper Sandler have reiterated buy ratings, with price targets between $460–$600. AppLovin is also now a top holding in several momentum ETFs.
Investors with a medium-term view may want to initiate a starter position now and add on strength above $430 or weakness near $360.
The company’s ability to maintain high margins and upgrade guidance makes it one of the few adtech names with real visibility in an AI-fueled world.

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Final Take
AppLovin isn’t cheap. But that doesn’t mean it’s not valuable.
With best-in-class margins, sticky customers, rapid AI deployment, and a focused operating model, this is a rare combination of scale and innovation.
While some investors are hesitating on valuation or growth deceleration, the broader picture points toward continued leadership in the mobile marketing space.
The stock has already run far, but the business is now leaner, faster, and more focused than it was a year ago.
If AppLovin continues to execute, and all signs suggest it will, it could still surprise to the upside.
In short: Don’t bet against the pipes of mobile advertising. Especially not now.

That’s all for today. Thank you for reading. If you have any feedback, please reply to this email.
Best Regards,
— Adam Garcia
Elite Trade Club
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