QS Research · Michael Burry's Scion Capital analyst template · 2006
AppLovin Corp (APP)
As of 2026-11-06 · 12/15 boxes filled from SEC filings and market data
Conclusion: SHORT
Conviction medium · base case -57% · downside -80% · upside -34%
At $384.80 (N1), the market is capitalizing TTM peak EBITDA of $6.05B (N10) at 21.3x (N20), which is essentially the current EV and price; that is not a cycle-normalized value. On section 13's FY2020-FY2025 normalized base of $4.00B EBITDA and $2.15B net income on TTM revenue of $7.61B (S2, N8), 25.7x normalized net income gives $165/share ($2.15B x 25.7 = $55.3B / 334.77M), -57.1% versus today, while 6.4x-21.3x normalized EBITDA gives $75-$253, or -80.5% to -34.3%. The business is better than its FY2022-FY2023 trough, with the Apps sale leaving advertising as substantially all revenue, Q3 2026 revenue up 55% and an 84.3% Adjusted EBITDA margin (S22, S28), but the 10-K does not establish a durable moat and lists no long-term client agreements (S25, S26), so peak margins should not be capitalized at the current multiple. Even the peak-TTM case at 21.3x is only about $384 (S2, N10, N20), so the rule supports a short, not a pass.
Key numbers
- Share price: $384.80
- Market cap: $128.82B
- Latest financial period: TTM to Sep 30, 2026
- Revenue (TTM): $7.61B
- EV / EBITDA (TTM): 21.3x
- P/E (TTM): 25.7x
- Price / book: 39.05x
The 15 boxes
- ✓ 1. Long-form business notes
AppLovin's FY2025 10-K describes an AI advertising platform whose revenue comes from advertising solutions, with Axon Ads Manager comprising substantially all revenue; MAX, Adjust and Wurl are supporting tools. The business changed from the FY2021 mobile-app developer/owned-Apps flywheel to the FY2025 advertising-centric model after the Apps business was sold on June 30, 2025. FY2025 revenue was $5.48B with operating income of $4.15B and operating cash flow of $3.97B, while FY2020-FY2023 shows the cycle: revenue $1.45B, $2.79B, $2.82B, $1.84B and operating income -$62.0M, $150.0M, -$47.8M, $772.4M.
- ✓ 2. Competitive advantage
AppLovin's source-supported edge is mainly technology/R&D and recent scale: FY2025 revenue $5.48B, operating income $4.15B and operating cash flow $3.97B, with operating income positive in FY2023-FY2025 after a FY2022 operating loss. But the 10-K does not establish a durable moat: it competes with Meta, Google, Amazon and Unity, depends on third-party platforms including some direct competitors, has no long-term client agreements, and says its IP may not provide a competitive advantage. Revenue fell from $2.82B FY2022 to $1.84B FY2023, so the cycle shows a sharp drawdown before the FY2024-FY2025 recovery; no TTM figures are in the sources.
- ✓ 3. 10-Q takeaways
Q3 2026 (quarter ended 2026-09-30, filed 2026-11-04) revenue was $2,184.8M, +55% y/y, and 9M 2026 revenue $5,951.0M, +56%; the entire increase came from monetization per install (net revenue per installation +55% in Q3, +68% in 9M) while 9M installations fell 7%. Operating margin held at 78% of Q3 revenue ($1,709.0M) and Adjusted EBITDA margin rose to 84.3% ($1,842.2M) from 82.4%. Net income of $1,438.9M (65.9% margin) includes $46.9M of fair-value remeasurement gains below the operating line ($97.5M in 9M), and SBC jumped to $84.2M in Q3 from $33.8M. Cash was $3.2B, 9M free cash flow $3,568.5M, and $2.9B of stock was retired in 9M 2026.
- ✓ 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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