The setup is continued revenue compounding as performance optimization expands into commerce-style budgets and performance video. The key swing factor is whether measurement and platform-policy risk stays contained as spend scales.

AppLovin can compound by turning performance ads into a “closed-loop outcomes product” (AI optimization + measurement trust + self-serve distribution), expanding from mobile UA into commerce/retail media and performance video while recycling high free cash flow into buybacks and selective capability builds.

Its core moat is applied intelligence + marketplace liquidity (optimization flywheel). Main misalignment is dependence on mobile platform rules and measurement legitimacy.

APP’s edge is outcome-driven bidding/ranking at massive scale, where better predictions pull more spend and create more training data. The next leg is distribution: self-serve onboarding and repeatable playbooks for commerce advertisers, plus performance-oriented video. With buybacks, even moderate multiple compression can still produce strong equity compounding if revenue keeps shifting toward higher-velocity non-gaming demand and the platform stays trusted under tighter privacy scrutiny.

The dominant risk is trust. If advertisers, platforms, or regulators lose confidence in how outcomes are measured (privacy compliance, fraud, attribution integrity), spend can slow quickly while the premium multiple compresses. A secondary risk is strategic drift: outcome guarantees/credit products could add revenue but also import balance-sheet tail risk that markets may discount.

Improved confidence that the post-divestiture focus and self-serve expansion can sustain durable growth, partially offsetting valuation concerns.

$762.81