AppLovin Corp (APP) Stock Analysis
AppLovin Corp (APP) Stock Analysis
Analysis from 10-Q filed 2025-11-05. Data as of Q4 2025.
Overall Grade: F (Concerning)
AppLovin Corp faces challenges in financial performance that warrant careful analysis.
| Metric | Value | Context |
|---|---|---|
| ROIC | 72.5% | Above industry average |
| FCF Margin | 68.4% | Strong cash generation |
| Debt/Equity | 1.6x | Elevated debt |
Investment Thesis: Strong return on invested capital of 72.5% suggests durable competitive advantages and efficient capital allocation.
Explore AppLovin Corp: Earnings History | Filing Intelligence | ROIC Analysis
Profitability: AppLovin Corp earns 72.5% ROIC, Top 5% in Technology
AppLovin Corp's trailing-twelve-month ROIC of 72.5% ranks Top 5% in Technology companies (sector median: 5.2%), driven by NOPAT margin of 59.6% combined with asset turnover of 0.9x. Source: 10-Q filed 2025-11-05. Gross margin of 86.5% with operating margin at 68.5% reflects strong pricing power.
| Metric | APP | Rating | Context |
|---|---|---|---|
| Return on Invested Capital (ROIC) | 72.5% | Excellent | Above sector median of 5.2% |
| Return on Equity (ROE) | 276.1% | Excellent | Efficient use of shareholder equity |
| Gross Margin | 86.5% | Excellent | Strong pricing power |
| Operating Margin | 68.5% | Excellent | Efficient operations |
Cash Flow: AppLovin Corp generates $4.0B FCF at 68.4% margin, positive NaN/8 quarters
AppLovin Corp generated $4.0B in free cash flow (TTM), a 68.4% FCF margin, a margin that ranks Top 5% in Technology. Operating cash flow exceeds net income by 1.2x, indicating high earnings quality. FCF was positive in N/A of the last 8 quarters. Source: 10-Q filed 2025-11-05.
| Metric | APP | Rating | Context |
|---|---|---|---|
| Free Cash Flow Margin | 68.4% | Excellent | Excellent cash conversion |
| Free Cash Flow (TTM) | $4.0B | Good | Positive cash generation |
| OCF/Net Income | 1.2x | Excellent | High earnings quality |
| FCF Consistency (8Q) | N/A | Warning | Variable cash flow |
Balance Sheet: AppLovin Corp at 1.6x leverage
AppLovin Corp's debt-to-equity ratio of 1.6x reflects high leverage. Total debt of $3.5B offset by $2.5B in cash. Source: 10-Q filed 2025-11-05.
| Metric | APP | Rating | Context |
|---|---|---|---|
| Debt to Equity | 1.6x | Warning | Elevated leverage |
| Net Cash Position | $-1.0B | Warning | Net debt position |
Valuation: AppLovin Corp trades at 68.4x earnings
AppLovin Corp trades at a P/E of 68.4x. Free cash flow yield of 1.7% reflects market expectations for growth.
| Metric | APP | Rating | Context |
|---|---|---|---|
| P/E Ratio | 68.4x | Warning | Premium valuation |
| EV/Sales | 39.7x | Warning | Growth premium priced in |
| FCF Yield | 1.7% | Warning | Lower cash yield |
Capital Allocation: AppLovin Corp returns 1.0% shareholder yield
AppLovin Corp's total shareholder yield is 1.0% (dividends + buybacks 1.0%). Source: 10-Q filed 2025-11-05.
| Metric | APP | Rating | Context |
|---|---|---|---|
| Total Shareholder Yield | 1.0% | Adequate | Dividend + buyback yield combined |
| Buyback Yield | 1.0% | Adequate | Minimal buyback activity |
| Total Capital Returned (TTM) | $2.2B | Good | Dividends + buybacks returned to shareholders |
Sector Rankings
| Metric | Value | Percentile | vs Median |
|---|---|---|---|
| Return on Invested Capital (ROIC) | 72.5% | Top 5% | 13.9x above |
| Free Cash Flow Margin | 68.4% | Top 5% | 7.5x above |
| Gross Margin | 86.5% | Top 25% | 1.7x above |
| Operating Margin | 68.5% | Top 5% | 14.1x above |
| Return on Equity (ROE) | 276.1% | Top 5% | 56.4x above |
| P/E Ratio | 68.4x | N/A | - |
Financial Scorecard
| Metric | APP | Rating | Sector Context |
|---|---|---|---|
| Return on Invested Capital (ROIC) | 72.5% | Excellent | Top 5% of sector (median: 5.2%) |
| Free Cash Flow Margin | 68.4% | Excellent | Top 5% of sector (median: 9.1%) |
| Gross Margin | 86.5% | Excellent | Top 25% of sector (median: 51.8%) |
| Debt to Equity Ratio | 164.6% | Warning | High financial leverage |
| P/E Ratio (Price-to-Earnings) | 68.4x | Warning | High expectations priced in |
| Free Cash Flow Yield | 1.7% | Warning | Growth-focused valuation |
Frequently Asked Questions
Q: What is AppLovin Corp's Return on Invested Capital (ROIC)?
AppLovin Corp (APP) has a trailing twelve-month Return on Invested Capital (ROIC) of 72.5%. This compares above the sector median of 5.2%. An ROIC above 20% indicates exceptional capital efficiency and strong competitive advantages.
Q: What is AppLovin Corp's Free Cash Flow Margin?
AppLovin Corp (APP) has a free cash flow margin of 68.4%, generating $4.0 billion in free cash flow over the trailing twelve months. A FCF margin above 20% indicates excellent cash conversion and a high-quality business model.
Q: Is AppLovin Corp stock overvalued or undervalued?
AppLovin Corp (APP) trades at a P/E ratio of 68.4x, which is above the sector median of N/A. The EV/Sales multiple is 39.7x. Free cash flow yield is 1.7%, reflecting growth expectations priced into the stock.
Q: How much debt does AppLovin Corp have?
AppLovin Corp (APP) has a debt-to-equity ratio of 1.6x with total debt of $3.5 billion. Net debt position is $1.0 billion.
Q: What is AppLovin Corp's revenue and earnings growth?
AppLovin Corp (APP) grew revenue by 61.1% year-over-year. Earnings per share increased by 115.2% compared to the prior year. Double-digit revenue growth indicates strong demand and market share gains.
Q: Is AppLovin Corp buying back stock?
AppLovin Corp (APP) repurchased $2.2 billion of stock over the trailing twelve months. This represents a buyback yield of 1.0%.
Q: How does AppLovin Corp compare to competitors in Technology?
Compared to other companies in Technology, AppLovin Corp (APP) shows: ROIC of 72.5% is above the sector median of 5.2% (Top 0%). FCF margin of 68.4% exceeds the sector median of 9.1% (Top 0% of sector). Gross margin at 86.5% is 34.6 percentage points higher than sector peers. These rankings are based on MetricDuck's analysis of all Technology companies with available SEC filings.
Q: What warning signs should I watch for with AppLovin Corp?
Investors in AppLovin Corp (APP) should monitor these potential warning signs: 1) Debt-to-equity of 1.6x is elevated. Regular monitoring of SEC filings and quarterly trends is recommended.
Data Source: Data sourced from 10-Q filed 2025-11-05. TTM metrics as of Q4 2025.
Methodology: Financial metrics calculated from SEC 10-K and 10-Q filings using standardized formulas. Sector comparisons use peer group based on SIC code.
Scope: This analysis covers SEC filing fundamentals — profitability, cash flow, balance sheet, and valuation metrics. For analyst estimates and price targets, consult sell-side research.
This analysis is for informational purposes only and does not constitute investment advice.