QS Research · Michael Burry's Scion Capital analyst template · 2006
AppLovin Corp (APP)
As of 2026-11-08 · 12/15 boxes filled from SEC filings and market data
Conclusion: SHORT
Conviction high · base case -85% · downside -93% · upside -77%
Q3 2026 was excellent -- revenue $2,185M (+55%) and net income $1,439M (+72%) -- but the price capitalizes peak TTM EBITDA of $6.05B at 21.7x, not the FY2020-FY2025 cycle-average EBITDA of $1.540B. On that normalized base, the cited 6.5x-19.7x profitable-peer EV/EBITDA range gives $28.9 to $89.6 a share; the 13.1x midpoint gives $59.2, or -85% from $391.22. The cycle is not theoretical: FY2022 revenue of $2.82B fell 35% to $1.84B in FY2023, and operating income was negative in two of six years. With the price above even the 19.7x upside case, this is a short; catalysts are the 2026-11-16 class-action deadline and heavy insider selling, while the balance sheet is not the problem.
Key numbers
- Share price: $391.22
- Market cap: $130.97B
- Latest financial period: TTM to Sep 30, 2026
- Revenue (TTM): $7.61B
- EV / EBITDA (TTM): 21.7x
- P/E (TTM): 26.1x
- Price / book: 39.70x
The 15 boxes
- ✓ 1. Long-form business notes
AppLovin is a performance advertising business: it is paid when advertisers hit return-on-ad-spend targets, and Axon Ads Manager is substantially all of revenue (FY2025 10-K). The cycle is visible in the six-year XBRL series: revenue $1.45B (FY2020) to $2.82B (FY2022), down to $1.84B (FY2023), then $3.22B (FY2024) and $5.48B (FY2025), with operating income going from -$47.8M (FY2022) to $4.15B (FY2025). The biggest change between the oldest and newest annual report here is structural: the FY2021 10-K describes a flywheel of owned Apps (350+ games, nineteen studios) feeding the ad engine, while the latest 10-K records the June 30, 2025 sale of the Apps business, leaving an advertising-only company. Sources provided end at FY2025; no 2026 quarterly or TTM figures are in this set.
- ✓ 2. Competitive advantage
The filings describe a fragmented ad-tech market where AppLovin sells against Meta, Google, Amazon and Unity, and claims it competes favorably on technology, reach and pricing rather than on brand or licences. Its own risk factors say it has no long-term client commitments and depends on app stores and platforms that are also competitors. The six-year record (FY2020-FY2025) shows a company with almost no capital intensity and violently cyclical profit: an operating loss of $47.8M in FY2022 followed by $772.4M, $1.91B and $4.15B of operating income in FY2023-FY2025, and cash from operations rising from $412.8M in FY2022 to $3.97B in FY2025.
- ✓ 3. 10-Q takeaways
Q3 2026 was a sharp acceleration: revenue was $2,184.815M, up 55% YoY, operating income was $1,708.968M, net income was $1,438.902M, and Adjusted EBITDA was $1,842.230M at an 84.3% margin. Nine-month revenue was $5,950.950M (+56%) and nine-month Free Cash Flow was $3,568.508M; cash was $3.2B at Sep 30 2026. Q4 2026 guidance is $2,365-$2,395M revenue and $1,995-$2,025M Adjusted EBITDA. I keep the $46.9M Q3 fair-value gain separate from operating earnings.
- ✓ 4. Corporate governance
Filled; members read this box.
- ✓ 5. Overview of the prior 3 years of 8-K filings
Filled; members read this box.
- ✓ 6. Other significant filings
Filled; members read this box.
- ✓ 7. Chronology of significant news and events
Filled; members read this box.
- ✓ 8. Comparables valuation interpretation
Filled; members read this box.
- ✓ 9. Insider trading interpretation
Filled; members read this box.
- ○ 10. Earnings-call notes
- ○ 11. Impression of the shareholder letter
- ○ 12. Scuttlebutt overview
- ✓ 13. Valuation and risk/reward summary
Filled; members read this box.
- ✓ 14. Current price suppression and potential catalysts
Filled; members read this box.
- ✓ 15. Conclusions
The call above.
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