Value
5.5/10data confidence 100%| Component | Sub-score |
|---|---|
| P/E | 7.0 |
| P/S | 1.2 |
| EV/EBITDA | 1.8 |
| Fwd P/E | 8.5 |
| PEG | 4.9 |
| Analyst target | 7.5 |
- ▸Forward P/E: 13.6x
- ▸PEG: 1.65
APP · Why this verdict
Why Applovin (APP) is rated BUY WAIT
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results. How we score · Editorial policy
Show full disclosure ▾Hide full disclosure ▴
About TrendMatrix. TrendMatrix is a publisher of general securities research and market commentary. We publish on a regular schedule. All content is the same for every subscriber in a tier — we do not provide personalized investment advice and we do not take into account any individual subscriber's financial situation, investment objectives, risk tolerance, tax situation, or holdings.
Not investment advice. TrendMatrix is not a registered investment adviser. Our content is for informational and educational purposes only. Consult your own licensed investment adviser, broker, or tax professional before making any investment decision.
Conflicts and positions. People who build TrendMatrix, or entities they control, may hold positions, long or short, in securities it covers, and may trade them at any time. Positions are not disclosed individually. Verdicts are generated by an automated model applied by the same rules to every covered stock, and are not adjusted for any position held by the people who build TrendMatrix. We do not accept payment from issuers for coverage.
No paid promotion. TrendMatrix does not accept payment from any issuer, broker, or third party in exchange for coverage of any security.
No fiduciary duty. No fiduciary, advisory, or agency relationship is created between you and TrendMatrix by reading our content or subscribing to our service.
Performance. Past performance is not indicative of future results. Performance figures reflect the published model only and do not reflect any individual subscriber's actual results.
VerdictBUY WAIT
Overall score7.0/10
ConfidenceMEDIUM
MacroRISK_OFF
TrendMatrix Research · core thesis
Engine thesis — one sentence
Applovin is an elite-margin advertising software company (ROE 204%, 65% margins, 53% growth) trading 69% below its 52-week high with 80.6% upside to the analyst target, but momentum is deeply negative, volatility is extreme and revenue depends on one product.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
Applovin earns a 204% return on equity with 65% margins, a Rule of 40 score of 99 and a wide economic moat. Quality breakdown | Margins stay above 50% and ROE stays above 100% over the next 12 months. | →Stable |
| CounterFree cash flow is only 72% of net income, flagged as an earnings quality warning, so reported profits may overstate cash. | ||
Revenue and earnings are growing 53% YoY, scoring 10/10, with a forward P/E of 11.4x. Growth breakdown | Growth stays above 30% YoY over the next 4 quarters. | →Stable |
| CounterGrowth of 53% decelerates as the base expands, and the stock has already fallen 69%, so investors may be pricing a sharp slowdown. | ||
The stock at $228.50 sits 80.6% below the $412.56 analyst target after a 69% drawdown, for a reward-to-risk of 8.09. Targets | Price recovers toward the $412.56 target while holding above the $201.93 stop. | ↓Deteriorating |
| CounterA 69% drawdown with a falling 200-day average (slope -12.5% per 30 days) shows heavy selling that analyst targets may not stop. | ||
Revenue depends on the Axon Ads Manager product, a high-severity concentration risk, with leverage penalized at a debt-to-equity of 1.1. Bear case | Axon performance holds and no adverse platform-policy change occurs over the next 12 months. | →Stable |
| CounterA change in advertising platform rules or a competitor win in this one product would hit most of the revenue base. | ||
The stock shows capitulation risk (RSI 28) with a volume surge of 2.4x average on the selloff, implied volatility of 148% and 8.1 risk score on short interest. Momentum breakdown | Volume stabilizes, RSI recovers above 40, and the price holds above $201.93. | ↑Improving |
| CounterFalling on-balance volume and a volume surge on a selloff mean sellers are still in control and the decline may continue. | ||
Applovin earns a 204% return on equity with 65% margins, a Rule of 40 score of 99 and a wide economic moat.
→StableQuality breakdown
- Expectation
- Margins stay above 50% and ROE stays above 100% over the next 12 months.
CounterFree cash flow is only 72% of net income, flagged as an earnings quality warning, so reported profits may overstate cash.
Revenue and earnings are growing 53% YoY, scoring 10/10, with a forward P/E of 11.4x.
→StableGrowth breakdown
- Expectation
- Growth stays above 30% YoY over the next 4 quarters.
CounterGrowth of 53% decelerates as the base expands, and the stock has already fallen 69%, so investors may be pricing a sharp slowdown.
The stock at $228.50 sits 80.6% below the $412.56 analyst target after a 69% drawdown, for a reward-to-risk of 8.09.
↓DeterioratingTargets
- Expectation
- Price recovers toward the $412.56 target while holding above the $201.93 stop.
CounterA 69% drawdown with a falling 200-day average (slope -12.5% per 30 days) shows heavy selling that analyst targets may not stop.
Revenue depends on the Axon Ads Manager product, a high-severity concentration risk, with leverage penalized at a debt-to-equity of 1.1.
→StableBear case
- Expectation
- Axon performance holds and no adverse platform-policy change occurs over the next 12 months.
CounterA change in advertising platform rules or a competitor win in this one product would hit most of the revenue base.
The stock shows capitulation risk (RSI 28) with a volume surge of 2.4x average on the selloff, implied volatility of 148% and 8.1 risk score on short interest.
↑ImprovingMomentum breakdown
- Expectation
- Volume stabilizes, RSI recovers above 40, and the price holds above $201.93.
CounterFalling on-balance volume and a volume surge on a selloff mean sellers are still in control and the decline may continue.
Per-dimension breakdown
Quality
9.0/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 10.0 |
| ROA | 10.0 |
| Gross margin | 10.0 |
| Op margin | 10.0 |
| Net margin | 10.0 |
| Current ratio | 8.7 |
| FCF quality | 5.5 |
| Moat | 7.5 |
| Rule of 40 | 9.5 |
| Piotroski F | 8.9 |
- ▸Excellent ROE: 204%
- ▸Strong margins: 65%
- ▸Earnings quality warning: 72% FCF/NI
- ▸Wide economic moat
Growth
10.0/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 10.0 |
| EPS growth | 10.0 |
- ▸Strong growth: 53% YoY
Momentum
8.1/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 2.7 |
| MACD | 10.0 |
| OBV | 10.0 |
| MA position | 6.0 |
| Volume | 10.0 |
| vol acceleration | 10.0 |
- ▸Overbought bear rally (RSI 75)
- ▸Volume accumulation (rising OBV)
- ▸Below 200-MA, MA slope -12.5%/30d — confirmed downtrend
- ▸Volume surge (4.3x avg) on up move
Sentiment
7.4/10data confidence 100%| Component | Sub-score |
|---|---|
| LLM sentiment | 6.4 |
| Analyst rating | 7.5 |
| Price target | 8.3 |
- ▸Analyst upside: 26%
Insider
6.1/10data confidence 75%| Component | Sub-score |
|---|---|
| materiality | 5.0 |
| holder change | 6.2 |
| notable moves | 7.0 |
- ▸No net insider activity — $0 (0.000% of mkt cap)
Peer rank
5.7/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 3.2 |
| quality rank | 9.6 |
| growth rank | 7.7 |
- ▸Superior ROE vs peers
- ▸Best-in-class margins
Technical
0.9/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 0.0 |
| support resistance | 0.7 |
| 52w position | 0.0 |
| gap | 3.0 |
- ▸Extreme gap up (28.7%) - may pull back
Risk (lower is worse)
4.2/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 8.1 |
| days to cover | 8.8 |
| volatility | 0.0 |
| put call | 5.5 |
| implied vol | 0.0 |
| max pain risk | 3.0 |
| beta | 1.7 |
| debt equity | 4.8 |
| news risk | 5.5 |
- ▸High IV: 82%
- ▸Above max pain $170
- ▸Concentration risks: 1 HIGH, 1 MED (10-K Item 1A — sized via position_sizing, validated via buy_confidence)
Catalyst
7.1/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 10.0 |
| surprise avg | 5.3 |
| news activity | 8.0 |
- ▸Perfect beat streak: 4Q
How the verdict was assembled
Engine trigger
Wide-moat business. Accumulate on weakness.
Engine technical detail
verdict_path:
L4:PATH_E_WIDE_MOAT|ENTRY_STICKY:WITHIN_BANDPassed (7)
- MOMENTUM:8.1>=5.5
- INSIDER:OK
- DEATH_CROSS:QUALITY_MOMENTUM_EXEMPT
- NEWS_EVENTS:NONE_RECENT
- EARNINGS_PROXIMITY:NO_DATE
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (1)
- ASYMMETRY:1.1<1.5@spot
Warning (2)
- DEATH_CROSS:quality=9.0>=7.5+momentum=8.1>=5.0 exempted
- 8K_CSUITE_CHANGE:5.02 (officer departure/appointment)
Reward-to-Risk
1.06
Upside
+15.9%
Downside
15.0%
Sizing output
STARTER
SetupRecovery — Death cross but MACD improving, RSI 75
EdgeNo clear edge — No clear edge identified
SuitabilitySpeculative — Drawdown -52% (>40% off 52w high)
Investment implication
The STRONG_BUY_WAIT verdict reflects the ASYMMETRY gate's 1.1<1.5@spot outcome against Growth at 10.0 and asymmetric R:R of 1.06.
The strongest dimensions are Growth at 10.0, Quality at 9.0, and Momentum at 8.1; the weakest are Technical at 0.9, Risk (lower is worse) at 4.2, and Value at 5.5. The V9 engine flagged 1 failed gate with 2 warnings, producing an asymmetric reward-to-risk of 1.06 and an engine sizing output of STARTER.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Elite Returns And Margins
Trip ifOperating margin falls below 45% from current 65%.
- P2Strong Revenue Earnings Growth
Trip ifRevenue growth falls below 25% YoY for 2 consecutive quarters.
- P3Deep Drawdown Analyst Upside
Trip ifPrice falls below the $201.93 stop-loss level.
- P4Single Product Concentration
Trip ifAxon Ads Manager accounts for more than 90% of revenue while growth falls below 20% YoY.
- P5Capitulation Volatility Risk
Trip ifRSI stays below 25 for more than 2 weeks while price keeps falling.