Here is my $APP Investment Thesis
$AppLovin Corporation(APP)$ is up 38% in the past month as investors realise that while $NVIDIA(NVDA)$ chips were the first in line for AI profits, APP's advertising business is next!
Margins are out of this world, Global TAM is $1T+, and revenue growth is accelerating!
Here is my APP Investment Thesis:🧵
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What does APP do?
Listen to the CEO explain it.
It is simple: “Half the money I spend on advertising is wasted, the trouble is, I don’t know which half.”
APP sells an answer to this old advertising dilemma.
AppLovin is an AI-based advertising platform that's focused on mobile apps but is expanding to WEB and Streaming.
1.AppDiscovery
APP AXON AI engine uses sophisticated AI models trained on billions of anonymized device interactions to find the best place for ads to maximise ROI.
This service carefully analyses the advertised app and then uses AXON's predictive algorithms to help advertisers find users who are most likely to download that app.
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AppDiscovery capabilities
- AI Targeting
- Customer LTV Estimates
- Retention Calculations
- Detailed ROAS targets
- Banner, Video, and other Ads
- Massive Scale, 1.6B Daily Users
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How effective is AppDiscovery
Following Apple’s controversial 2022 privacy rule changes, many apps saw significant revenue declines. One of those apps, Daily Yoga, sought AppLovin’s help to reignite growth, and the results were incredible and instantaneous.
- 100% month-over-month growth in US app installs
- 62% growth in day zero ROAS
- 24% growth in overall ROAS
- Reached 16th place in the US Apple App Store health and fitness rankings
2.MAX Supply Side Advertising Platform
Connecting the publisher and the advertisers has always been a challenge!
APP MAX is a supply-side platform that solves this problem with a bidding process that's:
- Automatic
- AI-driven
- Split-second fast
- Delivers the Highest price
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MAX results
APP own AppDiscovery demand-side advertising network bids alongside other advertising networks for MAX inventory.
The more demand MAX can bring and the higher the bids, the more both AppLovin and the publisher earn!
Thanks to MAX, video game studio N3TWORK saw:
- 75% increase in revenue per DAU on Android
- 85% increase on iOS
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3.Adjust
APP B2B advertising analytics and attribution SaaS product.
Figuring out which ads work is a headache for both the publisher and the advertiser. Advertisers want to spend on ads that work, while publishers want to charge a higher price for better inventory.
Adjust is an AppLovin’s medicine that fixes this headache for both the publisher and the advertiser!
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Adjust Benefits
- Deep integrations with ad platforms (not just $APP)
- Tracks campaign success
- Real-time dashboards
- Detailed and segmented data
- Valuable insights and analytics tools
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Adjust Results
One of APP clients, the video game developer 2K Games, famous for its NBA 2K series, was able to achieve a ROAS of 300-500%, thanks to Adjust.
Knowing what works and what doesn't is incredibly valuable, Adjust delivers this critical information.
4.Wurl
Wurl is an advanced connected TV (CTV) distribution and monetization platform!
Essentially, Wurl combines the capabilities of the AppDiscovery and MAX services, but just for CTVs, not mobile apps!
The company is focused on growing in the Free-to-stream advertising-supported streaming segment.
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5.Huge Mobile TAM
Analysts at Fortune Business Insights forecast that the global mobile advertising market will grow with a stunning 21.1% CAGR till 2032, reaching $1T!
APP is uniquely positioned to use AI to serve both the demand and supply sides of this large and growing pie.
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6.Streaming FAST TAM
While FAST TAM is much smaller, it is still large and completely open for capture.
Researchers at Grand View Research estimate that the FAST market will grow with a 22.1% CAGR to reach $32.5B by 2030!
$APP is well-positioned to grow in this space as premium streaming fatigue and higher prices push people towards more affordable, ad-supported entertainment options.
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7.E-commerce Advertising
In the Q2 2025 earnings call, the CEO said that they are extremely excited to grow in the fast-growing E-commerce advertising segment.
- E-commerce stores spend 10-20% on Ads.
- $125B in global e-commerce advertising spending.
$APP has only scratched the surface.
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8.Ecosystem Synergies
Together, AppDiscovery, MAX, Adjust, and Wurl create a synergistic feedback loop essential for AI-powered performance marketing!
MAX empowers publishers to maximize revenue from their ad inventory, generating data to train AI models. These AI models are used in AppDiscovery to acquire high-quality customers for MAX.
Adjust provides additional data to further measure and enhance AI advertising campaigns, ensuring that advertisers achieve profitable ad spend.
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9.Accelerating Sales Growth
Q2 2025 revenue grew 77% Y/Y to $1.26B
- Up from 40% in Q1 2025
- Up from 44% in Q4 2024
- Up from -5.2% in Q2 2024
There is a high chance this continues.
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10.Mindboggling Margins 🤯
Margins have transformed in the last 2 years!
EBITDA: 33.5% ➡️ 80%
Operating: 17.5% ➡️ 76%
Net Profit: 10.7% ➡️ 61.3%
FCF: 30.6% ➡️ 70%
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11.Valuation
As earnings and FCF exploded, so did the $APP stock, up 413% in the last year!
TTM P/E of 95 is high, but there is a lot of growth in the cards!
2028 P/E is 32.
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Conclusion
$APP needs to sustain high growth, keep its position, and fight off new entrants.
It needs to expand successfully to new verticals beyond mobile gaming, e-commerce, streaming, and web advertising.
Also, $Meta Platforms, Inc.(META)$ could really give them a tough time if they expand more heavily into this space.
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- ExiledKitty·09-29it's time to short. the accounting numbers don't look right.LikeReport