Assessing AppLovin (APP) Valuation After Recent Share Price Volatility And Strong Profitability Figures

Simply Wall St.01-31

AppLovin (APP) has been drawing attention after recent share price swings, with a gain of 4.96% over the past day and 9.06% over the past week, in contrast with weaker performance over the past month....

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See our latest analysis for AppLovin. The recent bounce sits against a weaker backdrop, with a 30-day share price return of a 17.94% decline and a 90-day share price return of a 10.68% decline, even as the 1-year total shareholder return is 55.74% and the 3-year total shareholder return is very large. This signals that momentum has cooled in the short term while longer term holders have still seen substantial gains. If AppLovin’s swings have your attention, this could be a good moment to broaden your watchlist and check out high growth tech and AI stocks that are catching investors’ interest. With AppLovin posting 19.2% annual revenue growth, 23.8% annual net income growth and trading about 30% below the average analyst price target, investors may question whether this represents a genuine opportunity or whether the market already anticipates future growth. AdvertisementMost Popular Narrative: 42.5% Undervalued AppLovin’s most followed narrative pegs fair value at $989.24 per share, well above the last close of $569.24. This sets up a wide valuation gap for investors to assess.  AppLovin (NASDAQ: APP) posted another stunning quarter, solidifying its position as one of the most profitable AI-powered software platforms in the public markets. For Q3 2025, revenue surged 68% year-over-year to $1.405 billion, while net income nearly doubled to $836 million, up 92%.  Read the complete narrative. Want to see how that kind of profitability feeds into the $989.24 fair value? The narrative leans heavily on fast scaling revenue, thick margins and a premium future earnings multiple. Curious which assumptions really move the valuation needle and how long this profitability profile is projected to last? Result: Fair Value of $989.24 (UNDERVALUED) Have a read of the narrative in full and understand what's behind the forecasts. However, this hinges on AXON’s data access and 80% EBITDA margins holding up, while privacy rules or bigger ad platforms could squeeze both over time. Find out about the key risks to this AppLovin narrative. Another View: Rich Multiples Against An Undervalued Story That user narrative points to a $989.24 fair value and an undervalued story, but the current P/E of 66x tells a different side. It sits well above the US Software industry at 28.8x, the peer average at 36.8x, and even the fair ratio of 54.1x. This suggests far less room for error if growth or margins soften. See what the numbers say about this price — find out in our valuation breakdown. NasdaqGS:APP P/E Ratio as at Jan 2026 Build Your Own AppLovin Narrative If you look at the numbers and come to a different conclusion, or simply prefer to test your own assumptions, you can build a custom view in minutes with Do it your way. A great starting point for your AppLovin research is our analysis highlighting 3 key rewards and 2 important warning signs that could impact your investment decision. Looking for more investment ideas? If AppLovin is on your radar, do not stop there. Use the screener to quickly surface more stocks that fit the way you like to invest.  Target stronger income potential by checking out these 14 dividend stocks with yields > 3% that already offer yields above 3% and could complement a growth focused portfolio. Chase the next wave of AI driven growth stories by scanning these 25 AI penny stocks that are already on investors' watchlists for their exposure to artificial intelligence. Spot opportunities others might be ignoring by reviewing these 869 undervalued stocks based on cash flows that our models flag as priced below their estimated cash flow value.   This article by Simply Wall St is general in nature. We provide commentary based on historical data\n    and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your\n    financial situation. We aim to bring you long-term focused analysis driven by fundamental data.\n    Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.\n    Simply Wall St has no position in any stocks mentioned.New: Manage All Your Stock Portfolios in One PlaceWe've created the ultimate portfolio companion for stock investors, and it's free.• Connect an unlimited number of Portfolios and see your total in one currency• Be alerted to new Warning Signs or Risks via email or mobile• Track the Fair Value of your stocksTry a Demo Portfolio for FreeHave feedback on this article? Concerned about the content? Get in touch with us directly. 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