AppLovin Corporation (APP)
Quantitative Summary
DeterministicAppLovin Corporation's P/E of 53.2 is above its sector average (32.1x), though accompanied by a 35.9% economic spread (ROIC − WACC). Financial health metrics are strong: Piotroski 9/9, Altman Z 19.0 (above 3.0 safe zone threshold). DCF fair value of $154 implies 63% downside based on model assumptions.
Generated deterministically from quant metrics and financial statements. Not a recommendation.
Algorithmic Teardown
AI-GeneratedThe fundamental economics present a stark dichotomy between exceptional operational efficiency and extreme valuation compression. The company exhibits pristine financial health, evidenced by a perfect Piotroski F-Score of 9/9, an Altman Z-Score of 20.8 indicating negligible bankruptcy risk, and a Beneish M-Score of -2.45 suggesting no earnings manipulation. This robust quality is underpinned by a massive ROIC-WACC spread of +35.8%, driven largely by DuPont decomposition where net margins at 60.8% outweigh moderate asset turnover of 0.76x and leverage of 3.40x to generate an extraordinary ROE of 156.2%. However, the Profitability Factor (RMW) registers -1.117, a counterintuitive metric that may reflect market pricing anomalies rather than deteriorating fundamentals given the margin expansion.
Despite these operational strengths, valuation metrics suggest significant overvaluation relative to intrinsic worth. The current P/E of 38.4x vastly exceeds historical norms and sector averages implied by such high growth rates, while the DCF model prices in a decade-long free cash flow compound growth rate of 32.0%. This aggressive assumption results in a fair value estimate of $153, implying -61.5% downside from current levels, indicating that the market has already priced in near-perfect execution for an extended period. The Fama-French Alpha of 100.88% annually confirms that recent returns have been driven entirely by growth factor exposure rather than value or profitability characteristics.
Risk assessment reveals a concerning divergence between internal balance sheet strength and external capital flow signals. While the Altman score remains robust, insider activity over the last ninety days shows net selling of approximately $170 million, potentially signaling management's view that current valuations exceed future cash flow potential. The negative Value Factor (HML) of -0.869 further confirms a heavy growth tilt with no safety margin from value attributes. Investors must weigh whether the extraordinary ROIC and margin profile can sustainably justify the steep discount required by DCF models against the reality of substantial insider distribution and implied mean reversion risks inherent in such high multiple environments.
Generated by LLM from quantitative data inputs. May contain inaccuracies. Not investment advice.
DCF Sandbox
Interactive5-year two-stage DCF. Terminal growth 3%. Default sliders match the pre-computed base case. Drag to explore scenarios. Not investment advice.
The growth rate the market implicitly expects over the next 10 years to justify today's price. Compare with historical growth of 70% YoY revenue.
Sensitivity Matrix
| TG ↓ / WACC → | 17.6% | 19.6% | 21.6% |
|---|---|---|---|
| 2% | $171 | $148 | $130 |
| 3% | $179 | $154 | $134 |
| 4% | $188 | $161 | $139 |
Center = base case. Green = >10% upside, Red = >10% downside vs $605.63.
Pre-computed DCF: WACC=19.6%, terminal growth 3%. Fair value $154 (-63.1%). Not investment advice.
Valuation Context
Currently trading 127% above its 5-year average P/E of 17.1x.
Price Chart with Moving Averages
Technical Setup
AI GeneratedAppLovin Corporation currently trades at $501.00, a level that sits significantly elevated relative to its historical cost basis within the Communication Services sector. This substantial distance from recent lows suggests an asset characterized by high volatility and aggressive price discovery rather than stable equilibrium. The current pricing structure implies that momentum is being driven primarily by speculative capital flow or strong fundamental optimism, creating a fragile dynamic where any shift in sentiment could trigger rapid corrections. Without the cushion of proximity to support levels, the risk profile for this position remains acute; small adverse moves can result in disproportionately large percentage drawdowns due to the wide gap between entry prices and current valuations. The technical environment presents a scenario where upside potential is theoretically unlimited but fraught with structural instability given the lack of immediate lower bounds visible at these price points. Investors must weigh whether this elevated pricing reflects sustainable earnings growth or merely temporary market exuberance, as the absence of nearby support zones means downside protection relies entirely on broader sector trends rather than intrinsic technical anchors. The current setup indicates a high-beta behavior pattern where risk and reward are magnified simultaneously; while strong fundamentals could justify such valuations over time, the immediate price action lacks the consolidation typically associated with durable momentum. Consequently, the trajectory appears susceptible to sharp retracements if market conditions tighten or if sector-wide headwinds emerge, highlighting that current strength may be more dependent on liquidity than long-term structural integrity.
Quant Health Deep Dive
Profitability & Value Creation
DuPont Analysis — ROE Decomposition
Breaking down Return on Equity to see how the company generates its ROE — efficiency, margins, or leverage.
Balance Sheet Health
Insider Activity (Last 90 Days)
Open-market buys vs sells by company insiders. Source: yfinance.
Earnings Surprise History
EPS estimates vs actuals for the most recent reported quarters. Source: yfinance.
Risk Profile
Sharpe = risk-adjusted return (higher is better). Max drawdown = largest peak-to-trough decline. 1,200+ trading days.
Underwater (Drawdown from Peak)
How far below the all-time high the price has been over time. Deeper = more pain for holders.
Rolling 60-Day Beta vs S&P 500 (VOO)
How the stock's sensitivity to market moves changes over time. β > 1 = more volatile than the market.
Fama-French 5-Factor Exposure
Academic factor model decomposition — what's really driving this stock's returns.
Fama-French 5-Factor Model. Data: Kenneth French Data Library. Regression over 3 years of daily returns.
Fundamentals
Passive Flow Attribution
ETF Draft EffectWhen investors buy or sell ETFs like IGV or XNTK, the fund manager is mechanically forced to buy or sell APP shares regardless of AppLovin Corporation's individual fundamentals. We estimate $19.7B of passive capital is structurally linked to APP through 8 tracked ETFs. This substantial passive exposure means that ETF inflows and outflows — not company fundamentals — can dominate daily volume on this stock.
Passive exposure = Σ (ETF AUM × stock weight in ETF) across 8 tracked ETFs. Actual passive ownership is larger (includes mutual funds). Not investment advice.
ETF Contagion Visualizer
Simulate a price drop in AppLovin Corporation to visualize passive redemption contagion across ETFs and collateral stocks.
If AppLovin Corporation (APP) experiences a significant drawdown, ETF redemptions can create collateral selling pressure on co-held stocks. Our model identifies NVIDIA CORP (NVDA) as the most exposed collateral stock, sharing 2 ETFs with APP. This is the "Passive Contagion" effect described in the Inelastic Market Hypothesis.
Contagion model based on shared ETF exposure and constituent weights across 29 tracked ETFs. Estimated selling pressure is a simplified model — actual impact depends on market liquidity, ETF redemption mechanics, and market-maker activity.
APP Ownership Dynamics
Passive funds hold 1 in every 8 APP shares, reducing daily market volatility.
AppLovin Corporation (APP) exerts measurable gravity on the passive index market, currently representing 4.9% of the IGV (IGV) and 1.7% of the XNTK (XNTK). Across 29 tracked ETFs, approximately 40M shares (12.9% of float) are held by passive funds and rarely trade on the open market. This level of passive ownership means index rebalances can create outsized volume events.
ETFs with Highest APP Exposure
Float lock-up computed from 29 ETFs tracked by SecuritiesDB. Actual passive ownership is higher (includes mutual funds, pension funds, etc.).
APP Institutional Volume Profile
252-day volume distribution by price level. The Point of Control (POC) marks — the price where the most institutional volume transacted — an implicit support/resistance floor.
The highest-volume price zone for AppLovin Corporation over the past year sits near $394.48 (9% of 252-day volume). The current price of $605.63 trades 53.5% above this institutional floor — a sign of upside momentum, though a pullback to the POC zone is a common reversion target.
Volume Profile computed from 252 trading days of OHLCV data. Volume allocated to price bins proportionally based on daily high-low range. Not investment advice.
APP Capital Efficiency
How efficiently does AppLovin Corporation convert operating profits into free cash? The FCF Conversion ratio measures the gap between accounting earnings and real cash generation.
AppLovin Corporation converts 91% of its EBITDA into free cash flow, an exceptional conversion rate indicating an asset-light business model with minimal capital reinvestment drag. The positive ROIC-WACC spread of 35.9% confirms that reinvested capital creates shareholder value.
Capital efficiency = Free Cash Flow ÷ EBITDA. Reinvestment = (EBITDA − FCF) ÷ EBITDA. Metrics from latest annual filings. Not investment advice.
Fails-to-Deliver (FTD) History
SEC-reported settlement failures. Elevated FTDs can indicate high short-selling pressure, operational settlement issues, or naked shorting activity.
| Date | Failed Shares | Close Price | Notional Value |
|---|---|---|---|
| 2026-05-13 | 90 | $490.69 | $44,162.1 |
| 2026-05-08 | 3,343 | $498.87 | $1.7M |
| 2026-05-07 | 5 | $468.83 | $2,344.15 |
| 2026-05-04 | 19,644 | $460.00 | $9.0M |
| 2026-04-29 | 1 | $449.03 | $449.03 |
| 2026-04-27 | 20,060 | $448.29 | $9.0M |
| 2026-04-21 | 1 | $490.96 | $490.96 |
| 2026-04-20 | 1,913 | $477.20 | $912,883.6 |
| 2026-04-16 | 14,257 | $464.63 | $6.6M |
| 2026-04-15 | 204 | $433.51 | $88,436.04 |
| 2026-04-14 | 10,933 | $417.45 | $4.6M |
| 2026-04-13 | 1,157 | $391.38 | $452,826.66 |
| 2026-04-10 | 100 | $379.14 | $37,914 |
| 2026-04-09 | 285 | $391.20 | $111,492 |
| 2026-04-07 | 6,344 | $412.68 | $2.6M |
| 2026-04-01 | 15,347 | $398.00 | $6.1M |
| 2026-03-30 | 13 | $381.20 | $4,955.6 |
| 2026-03-27 | 811 | $391.21 | $317,271.31 |
| 2026-03-25 | 27 | $435.91 | $11,769.57 |
| 2026-03-24 | 3,863 | $458.95 | $1.8M |
| 2026-03-23 | 6,363 | $442.39 | $2.8M |
| 2026-03-17 | 2 | $453.30 | $906.6 |
| 2026-03-16 | 21,339 | $458.67 | $9.8M |
| 2026-03-13 | 12,655 | $449.33 | $5.7M |
| 2026-03-09 | 4,165 | $502.14 | $2.1M |
| 2026-03-06 | 200 | $508.56 | $101,712 |
| 2026-03-05 | 2 | $482.81 | $965.62 |
| 2026-03-03 | 4,332 | $432.98 | $1.9M |
| 2026-03-02 | 161 | $434.77 | $69,997.97 |
| 2026-02-27 | 947 | $444.93 | $421,348.71 |
Source: SEC Regulation SHO FTD data. Data is reported with a ~30 day delay. High FTD quantities relative to average daily volume may indicate settlement stress.
Price Correlations
Statistical correlation of daily returns with other stocks. High correlations indicate stocks that move together; negative correlations can offer diversification.
| Peer | 252-Day (1Y) | 126-Day (6M) | Direction |
|---|---|---|---|
| WTGXX | NaN | NaN | |
| HOOD | 0.519 | 0.512 | Moderate |
| SHOP | 0.500 | 0.632 | Moderate |
| PLTR | 0.493 | 0.582 | Moderate |
| CRDO | 0.452 | 0.508 | Moderate |
| KYG254571055 | 0.452 | 0.508 | Moderate |
| CVNA | 0.446 | 0.431 | Moderate |
| RBLX | 0.434 | 0.483 | Moderate |
| APH | 0.430 | 0.466 | Moderate |
| DASH | 0.427 | 0.443 | Moderate |
Pearson correlation of daily log returns. 252d ≈ 1 trading year. Computed from price history. Not investment advice.
Compare APP to Peers
Quant metrics computed deterministically from financial statements and price data. Updated: 2026-06-02.
SecuritiesDB provides programmatic data aggregation for informational purposes only. None of the metrics, summaries, or algorithmic flags constitute a recommendation to buy or sell any security.