Episode summary
Applovin (APP): The 30-Bagger Down More Than Half
The Intrinsic Value Podcast
· · Hosts: Kyle Grieve, Shawn O'Malley
Summary
AppLovin is presented as a broken stock rather than a broken business: revenue has reportedly grown more than 50% while free cash flow keeps compounding, even as the shares have fallen sharply. The discussion frames the company as a mobile advertising intermediary that connects advertisers with app publishers, with Axon on the demand side and Max on the supply side. The host and the guest argue that the core appeal is simple: better targeting and a real-time auction can improve returns for advertisers while raising monetization for publishers.
A major theme is whether that advantage is durable. The guest emphasizes that AppLovin has meaningful scale, strong data feedback loops, and an unusually lean cost structure, but also faces credible competition from Google, Meta, Unity, and newer players like Liftoff Mobile. The conversation also highlights how AppLovin moved away from owning game studios and toward being a pure advertising platform, which may reduce conflicts and sharpen the business model.
Valuation and capital allocation round out the discussion. The guest points to high margins, high ROIC, and very effective buybacks, but also notes that limited reinvestment opportunities may cap how much of that quality can be turned into future growth. That leaves the stock looking cheap relative to fundamentals, yet still not easy to underwrite with conviction.
Key takeaways
- The host says AppLovin looks like a "broken stock" because revenue is up more than 50% while the shares are down sharply.
- The guest argues Axon and Max create value by matching advertisers and publishers better than the old waterfall model.
- The guest says AppLovin’s scale and data flywheel are its best defenses, but Google, Meta, Unity, and Liftoff remain real competitors.
- The guest notes AppLovin’s margins and ROIC are exceptionally high, but reinvestment opportunities appear limited.
- The discussion says buybacks were highly accretive in 2022 to 2024, with about $2.5 billion used to retire roughly 70 million shares.
Notable quotes
“Apploven stock has hald this year and over that same stretch revenue has grown by over 50% while free cash flow continues to compound at a very high rate”
“It reminds me a lot of the trade desk. They have similar business models and for a long time the numbers at the trade desk look incredible”
“So, AppL is basically sliding right in the middle, making money on the difference between how much an advertiser will spend and how much the publisher needs to be paid”
“what Max does is it basically changes the fixed sequence method to a realtime auction”
How the episode opens
Sometimes the market offers you incredible opportunities just waiting to be bought. Apploven stock has hald this year and over that same stretch revenue has grown by over 50% while free cash flow continues to compound at a very high rate. In other words, it appears that this isn't a broken business, it's a broken stock.
This is normally the exact setup that we are looking for. I sense a little hesitation in your voice, which is odd because I think you're normally all over these types of opportunities. I am.
But there are some areas of this business regardless of the high growth and cheap price that give me pause. But let's go over whether these hurdles are enough to keep us out of apploven or not. We've done quite a lot of work looking at businesses that specialize in advertising on the show.
We own Alphabet and Reddit, which I'd say are direct advertising platforms, even though they have other products associated with those companies. But then we also own some companies that are still doing advertising but in a more indirect way. Think Uber, Amazon, and Netflix.
These are businesses that have an advertising angle to their business, even though they aren't necessarily known for it to the same degree as maybe a Google or a social media platform like Reddit. So today, I'm excited to discuss another direct advertising play, AppLoving. So what initially attracted me to this name was the fact that this business was number one on Yahoo Finance's list of businesses trading closest to its 52- week lows.
If I told you this, you'd probably think, well, this is some crappy business that is falling apart or leveraging up while allocating capital poorly. But I think you'd probably be wrong on that as it pertains to AppLin.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- app monetization
- ad tech auctions
- google meta competition
- app buybacks
- intrinsic value valuation
Companies and tickers mentioned
- APP
- GOOGL
- GOOG
- META
- AppLovin
- Meta
Watch the episode
Watch “Applovin (APP): The 30-Bagger Down More Than Half” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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The Intrinsic Value Podcast, this episode and its artwork belong to The Investor's Podcast Network. Octagon is not affiliated with the show; this page is an independent summary.
