If you’re one of the many investors watching AppLovin stock, you know what a rollercoaster it’s been. Just recently, shares jumped 9.6% in a single week after news about the company expanding its mobile advertising partnerships hit the headlines. That excitement stands in contrast to the dip of 7.4% in the last month, a reminder of how quickly sentiment can swing. But if you look longer term, AppLovin’s numbers are striking: up 81.4% year to date and an astonishing 273.1% over the past year. Since its public debut, AppLovin has returned over 3,500%, a number that instantly captures attention.
What’s driving all this? The company has been aggressive in scaling its software platform, and recent news around strategic alliances in the AI-driven adtech space has fueled more optimism about future market share. However, the market is also wrestling with how to properly value this growth, especially as competitors ramp up in the same sector. Meanwhile, our current valuation score for AppLovin is 0 out of 6, which suggests the company isn’t undervalued by any of the checks we use.
So, how should you weigh these price swings and headline-grabbing returns against the valuation case for AppLovin? Let’s dig into the main valuation approaches analysts use. And, if you stick around to the end, we will introduce a smarter way to value AppLovin that just might change how you view the whole story.
AppLovin scores just 0/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.
A Discounted Cash Flow (DCF) model values a company by estimating how much cash it will generate in the future and then calculating what those future cash flows are worth in today’s dollars. This approach provides an intrinsic value for AppLovin based on the sum of its forecasted Free Cash Flows (FCF), discounted back to the present.
For AppLovin, the latest reported Free Cash Flow stands at $2.89 billion. Analysts forecast FCF to rise steadily, and by 2029, projections put annual FCF at $8.84 billion. While direct analyst estimates only cover the next five years, further increases beyond that are extrapolated using industry models. All figures are presented in USD.
After all future cash flows are accounted for, the DCF model produces an intrinsic fair value of $528.62 per share. However, the current share price sits 17.3% above this calculated value, indicating that, according to this model, the stock is overvalued by a notable margin.
Result: OVERVALUED
Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for AppLovin.
APP Discounted Cash Flow as at Oct 2025
Our Discounted Cash Flow (DCF) analysis suggests AppLovin may be overvalued by 17.3%. Find undervalued stocks or create your own screener to find better value opportunities.
For profitable companies like AppLovin, the Price-to-Earnings (PE) ratio is a popular indicator because it relates the company’s market valuation directly to its actual earnings power. Investors use the PE ratio to gauge whether a stock is expensive or cheap relative to how much profit the business is generating today.
However, what counts as a “normal” or “fair” PE ratio can vary quite a bit based on growth prospects and perceived business risks. Stocks with faster expected growth or lower risk can command higher PE ratios, while slower-growing, riskier firms tend to trade at lower multiples.
Currently, AppLovin trades at a lofty PE ratio of 83.4x. That is markedly above the Software industry average of 33.3x and also higher than the average among its direct peers, which stands at 50.0x. To add more context, Simply Wall St has developed the “Fair Ratio,” which customizes the expected PE for a company based on factors like its earnings growth, industry, margin profile, size, and unique risks. For AppLovin, this Fair Ratio comes in at 58.4x. Unlike generic industry or peer comparisons, this approach gives a more tailored benchmark that reflects the real strengths and vulnerabilities in AppLovin’s specific circumstances.
Comparing the actual PE of 83.4x to the Fair Ratio of 58.4x, AppLovin appears to be trading above what its fundamentals justify, even when accounting for its strong growth and industry context.
Result: OVERVALUED
NasdaqGS:APP PE Ratio as at Oct 2025
PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover companies where insiders are betting big on explosive growth.
Earlier, we mentioned that there is an even better way to understand valuation, so let’s introduce you to Narratives. A Narrative is the story you believe about a company, where you outline your expectations for its future revenue, earnings, and margins, and then connect that story to what you think is a fair value for its stock.
Narratives bridge the gap between a company’s business story and a full financial forecast, making it easier to see the link between your assumptions and what the shares are worth today. On Simply Wall St’s Community page, millions of investors use Narratives as an intuitive, accessible tool to share perspectives and update their valuation as new information arrives, such as news or fresh earnings results.
With Narratives, you do not just rely on a single “fair value.” Instead, you can compare different views and see how your own thinking aligns or differs. For example, some investors might build a bullish Narrative for AppLovin around accelerated global expansion and expect a fair value as high as $650. Others, more cautious about regulatory risks, might set their fair value nearer to $250. Narratives empower you to quickly assess whether the current price is above or below your fair value and to confidently decide when to buy or sell based on your personal story and forecast.
Do you think there’s more to the story for AppLovin? Create your own Narrative to let the Community know!
NasdaqGS:APP Community Fair Values as at Oct 2025
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
Companies discussed in this article include APP.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email [email protected]
Sign Up For Daily Newsletter
Be keep up! Get the latest breaking news delivered straight to your inbox.
By signing up, you agree to our Terms of Use and acknowledge the data practices in our Privacy Policy. You may unsubscribe at any time.
