CK Capital
Defense/Space/Tech/Photonics Investor, Co-Owner of CV Research
AppLovin's e-commerce advertiser base, the part of the business the whole bull case depends on, appears to be compounding at double digits weekly while the stock sits at recent lows. Posts report Axon Pixel installs up 11.7% week over week, which if true is extremely bullish. The pixel lets AppLovin's AI see what people buy after clicking an ad, so it is basically a live count of e-commerce advertisers, and more pixels mean more advertisers and a smarter engine for all of them. x.comÂ
AppLovin at $310 is one of the better value setups in tech after being repriced 25% lower over a timing issue. Revenue grew 53% at an 84% adjusted EBITDA margin, a Rule of 40 score of 137. The stock fell on a roughly 1% revenue miss; CEO Adam Foroughi said the model improvement driving revenue landed just after the quarter closed, with no weaker demand or competitive change. The SEC inquiry closed with no recommended action, and Q3 is guided to 46-48% growth at an 83% margin. x.comÂ
AppLovin's push from mobile-gaming ads into e-commerce is gaining real traction, and the stock has a wide base of support with a gap above. E-commerce ad spend hit a record $1.28 billion in Q2, 28% above the usually stronger Q4 peak. Q2 revenue grew 53% to $1.92 billion with an EPS beat and about 84% EBITDA margin, and Q3 guidance of 46-48% growth frames the miss as a timing issue already resolving. Management bought back about $551 million of stock. x.comÂ
AppLovin can turn its share price around and get back to being a market darling because its management is not getting lazy, and management matters more than product, moat or user experience. Per a quoted investor, after his business posted poor results testing AppLovin ads, an AppLovin leader reached out on a Saturday to ask about the experience. AXON pixel installs rose 7.4% week over week to 15,726, after gains of 5.1% and 11.7% the prior two weeks. x.com x.comÂ
AppLovin's ad yield engine has run out of gas, setting up the same structural decay that hit The Trade Desk as ad spend consolidates into walled gardens. Conversion rates stalling around 1.4%, delayed AI rollouts and mounting litigation point to a fundamental tailspin that Piper Sandler's cautious call understates. Being down 60% this year is not a bottom; buying here is catching a falling knife on a broken narrative. x.comÂ
AppLovin's roughly 60% drop in 2026 has reset expectations while revenue still grows over 50%. Last quarter revenue rose 53% to $1.92B at an 84% adjusted EBITDA margin. The moat is AXON's feedback loop: more ads bring more data and better predictions, at a scale rivals struggle to copy. Risks are real: e-commerce must prove itself, and Unity is a legal and competitive threat. It is on a falling-knife watchlist, not a buy just because it fell; 2030 cases are $225 bear, $600 base, $1,000 bull. … Show more
AppLovin is opening its Axon ad platform to all advertisers via self-serve from June 2026, extending its gaming playbook to a non-game consumer app market several times larger. Consumer ads such as e-commerce have already overtaken gaming, and April set a record for monthly advertiser spend. Q1 free cash flow was $1.29bn, with $1bn spent on buybacks. Q2 revenue guidance is $1.915-1.945bn at 84-85% EBITDA margins, so most incremental revenue drops to profit. x.comÂ
AppLovin needs a very clean quarter to rebuild confidence. Investors question how much market-share runway its gaming ad business has left and how sustainable its very high margins are, and last quarter's model-upgrade cadence issues raised new execution concerns. Gaming ads must remain the central growth engine, since e-commerce will not be big enough for a while. x.com x.comÂ
AppLovin has entered a value zone, and whether it is undervalued hinges on e-commerce opening a second growth curve for its AXON ad engine. Shares are down nearly 60% though Q2 revenue rose 53% at an 84% adjusted EBITDA margin, and P/E is about 23x versus a ~50x historical median. Management sees non-gaming as 5-10x gaming, and early e-commerce advertisers scaled spend without CAC worsening. Sustained 30%+ growth could earn 30-35x; if e-commerce fails, 15-20x. x.comÂ
AppLovin looks cheap at current levels unless something catastrophic is happening beneath the surface. Per @stock_analysisx, its EPS rose from $0.09 to $13 in four years while the stock is down 60% from its high at 15x forward earnings. Still, reaching its above-30% annual growth target through Axon recommendation-engine improvements alone seems unlikely. x.com x.comÂ
AppLovin is priced for perfection heading into earnings while its leading indicators are softening. Pixel additions slowed in June and checks on advertisers' return on ad spend have weakened. x.comÂ
AppLovin's share price has fallen much faster than its business, so the market is pricing in moat erosion the data has not shown. Q2 revenue still grew 53% to about $1.9B at an EBITDA margin above 80%, and Q3 guidance of $2.1B implies 48% growth. MAX publisher earnings grew double digits sequentially and its share of publisher waterfalls held steady. At about 15x FY27 earnings, the real test is whether AXON works in commerce beyond gaming, and Q3 must show the model delay was real. x.comÂ
