Should You Buy And Hold AppLovin Stock?
AppLovin (APP) stock has lost 61% over the past twelve months. Its revenue grew 61% in the twelve months to fiscal Q2 2026. If you own the shares, you have watched them fall while the business kept growing fast. If you do not, the price is far lower than a year ago. What would you make holding AppLovin stock for three years from this price?
AppLovin Holders Would Make 76.9% On These Assumptions
On our assumptions, AppLovin stock would be worth 76.9% more in three years than it is today. That is arithmetic on the company’s own numbers, not a forecast. Revenue times the net margin, the share of revenue kept as profit, gives profit. Profit times the P/E, the price you pay for each dollar of yearly profit, gives the company’s value.
We assume revenue grows 30% a year. That is the fastest pace we allow, and it is well below AppLovin’s growth over the latest twelve months. Because the assumed pace is slower, we also assume a P/E below today’s. We set the net margin by blending today’s level with its three-year average, giving today’s level the larger weight. The table shows AppLovin today against the scenario in three years.
| Today | In three years (scenario) | |
|---|---|---|
| Revenue | $6.8 billion | $15.0 billion |
| Net margin | 64.6% | 57.2% |
| Earnings | $4.4 billion | $8.6 billion |
| P/E | 21.5 | 19.6 |
| Share price | $281.31 | $497.56 |
All of the gain comes from revenue, because the scenario’s margin and P/E are both below today’s. That revenue comes from advertisers, and management said on the fiscal Q2 2026 call that gaming is still the majority of it.
Can AppLovin’s Revenue Rise 30% Annually?
Management has put a similar number on the business. On the fiscal Q2 2026 call it said the business can compound at roughly 30% a year over the longer term. That matches the pace we assume. Management said it expects that pace as it keeps improving its gaming business and expands into consumer advertising.
AppLovin is growing faster than 30% today, but the pace has slowed. Year-over-year revenue growth was 52.8% in fiscal Q2 2026. Three quarters earlier it was 68.2%, and it fell in every quarter in between. Management guided growth of 46% to 48% for fiscal Q3 2026, though that guide covers one quarter, not three years. AppLovin is expected to report that quarter on or around November 3, 2026.
Management said model performance is the biggest driver of gaming growth. So AppLovin needs its AI advertising models to keep improving. In fiscal Q2 2026 the models improved more slowly than normal. Management said the next improvement arrived just after the quarter ended.
Where Is AppLovin’s Upside Most Exposed?
The table shows the three-year upside when one assumption changes.
| If instead | Three-year upside |
|---|---|
| Nothing changes (the scenario) | 76.9% |
| Revenue grows two points a year slower | 68.8% |
| The margin returns to its three-year average | 23.8% |
| The P/E stays where it is today | 94.7% |
| Five years at the same pace instead of three | 198.9% |
Most of the gain would disappear if the net margin returned to its three-year average. That average is only 40.1%, pulled down by a net margin of 0.7% three years ago. Costs are rising too: management said it spent more on computing power to train its models in fiscal Q2 2026.
Revenue is where the gain comes from, and the net margin is the largest cut in the table. But the assumption that needs the smallest miss to erase the whole gain is the P/E. You would make nothing over three years if the P/E fell to 11.1, or 48.6% below today’s. That is with the other two assumptions unchanged. For comparison, the stock’s P/E averaged 49.2 across its last eleven quarter-ends, leaving out readings above 100. Today’s P/E is less than half of that.
AppLovin is still growing faster than the scenario assumes, and management said the next model improvement had arrived. The risk is that growth keeps slowing while computing costs rise. AppLovin is expected to report fiscal Q3 2026 results in early November. Revenue growth inside the guided range would still be well above the scenario’s pace. Growth below that range would make AppLovin a riskier stock to buy and hold.
Does This Mean You Should Act On APP?
Our purpose is to inform you with unique data so you make the right investment decisions. That said, betting on a single stock is always risky, no matter which direction you choose.
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