APP Down 14% in One Day, Should You Buy The Stock Despite Its High Valuation?

We believe there is not much to fear in APP stock given its overall Very Strong operating performance and financial condition. Hence, despite its Very High valuation, the stock appears Attractive but Volatile. Here is our multi-factor assessment.

APP stock has fallen meaningfully recently and we currently find it attractive but volatile. While this may feel like an opportunity, there is significant risk in relying on a single stock. On the other hand, there is a huge value to a broader diversified approach we take with Trefis High Quality Portfolio. We go beyond just equities. Is a portfolio of 10% commodities, 10% gold, and 2% crypto in addition to equities and bonds – likely to return more during the next 1-3 years, and protect you better if markets crash 20%? We have crunched the numbers.

Let’s get into details of each of the assessed factors but before that, for quick background: With $199 Bil in market cap, AppLovin provides a software platform for mobile app developers to enhance app marketing and monetization, featuring AppDiscovery, a marketing solution that matches advertiser demand with publisher supply through auctions.

[1] Valuation Looks Very High

This table highlights how APP is valued vs broader market. For more details see: APP Valuation Ratios

[2] Growth Is Very Strong

• AppLovin has seen its top line grow at an average rate of 23.7% over the last 3 years
• Its revenues have grown 48% from $3.6 Bil to $5.3 Bil in the last 12 months
• Also, its quarterly revenues grew 77.0% to $1.3 Bil in the most recent quarter from $711 Mil a year ago.

This table highlights how APP is growing vs broader market. For more details see: APP Revenue Comparison

[3] Profitability Appears Very Strong

• APP last 12 month operating income was $3.0 Bil representing operating margin of 55.6%
• With cash flow margin of 53.7%, it generated nearly $2.9 Bil in operating cash flow over this period
• For the same period, APP generated nearly $2.4 Bil in net income, suggesting net margin of about 45.7%

This table highlights how APP profitability vs broader market. For more details see: APP Operating Income Comparison

[4] Financial Stability Looks Very Strong

• APP Debt was $3.5 Bil at the end of the most recent quarter, while its current Market Cap is $199 Bil. This implies Debt-to-Equity Ratio of 1.8%
• APP Cash (including cash equivalents) makes up $1.2 Bil of $6.0 Bil in total Assets. This yields a Cash-to-Assets Ratio of 20.0%

[4] Downturn Resilience Is Very Weak

APP has fared much worse than the S&P 500 index during various economic downturns. We assess this based on both (a) how much the stock fell and, (b) how quickly it recovered.

2022 Inflation Shock

• APP stock fell 91.9% from a high of $114.85 on 11 November 2021 to $9.30 on 27 December 2022 vs. a peak-to-trough decline of 25.4% for the S&P 500.
• However, the stock fully recovered to its pre-Crisis peak by 16 September 2024
• Since then, the stock increased to a high of $718.54 on 30 September 2025 , and currently trades at $587.00

But the risk is not limited to major market crashes. Stocks fall even when markets are good – think events like earnings, business updates, outlook changes. Read APP Dip Buyer Analyses to see how the stock has recovered from sharp dips in the past.

The Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, has a track record of comfortably outperforming its benchmark that includes all 3 – S&P 500, Russell, and S&P midcap. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride, as evident in HQ Portfolio performance metrics.