AppLovin Corporation (APP): A Bull Case Theory

We came across a bullish thesis on AppLovin Corporation on Accrued Interest’s Substack by Simeon McMillan. In this article, we will summarize the bulls’ thesis on APP. AppLovin Corporation's share was trading at $623.59 as of December 1st. APP’s trailing and forward P/E were 73.54 and 43.48 respectively according to Yahoo Finance.

AppLovin has rapidly emerged as a major force in digital advertising, competing directly with Meta, Snap, and TikTok for advertiser budgets. The company reported over $11 billion in gross ad spend as of Q1, a scale comparable to the combined revenues of Pinterest, Snap, and Twitter. Its lean operating model is a key differentiator, AppLovin has achieved strong revenue growth with minimal headcount, allowing it to sustain industry-leading operating margins while avoiding the overhiring and layoffs seen at other tech giants.

CFO Matt Stumpf’s disciplined approach supports these high margins, while CEO Adam Foroughi’s capital allocation strategy—deploying all free cash flow toward share buybacks—signals confidence in intrinsic value and a lack of near-term M&A ambitions. Despite currently serving a limited share of Northbeam’s surveyed customer base, AppLovin already commands a 3–5% budget share, ranking just behind Meta and Google and surpassing TikTok, Pinterest, and Snap. This underscores significant room for market expansion as it scales across more clients and regions.

Moreover, the company identifies a vast untapped opportunity in in-game advertising, estimating that enabling ads across gaming publishers could unlock an additional $100 billion in total addressable market. With EBITDA margins of 80–85% and conversion of over 50% of EBITDA to free cash flow, AppLovin is positioned as a durable cash generator. Future marketing efforts, including potential large-scale campaigns to increase brand visibility, could further accelerate customer growth. Though the stock has rallied, its structural strengths and growth potential make it a compelling long-term investment.

Previously we covered a bullish thesis on AppLovin Corporation (APP) by Jimmy Investor in March 2025, which highlighted its AI-powered ad monetization platform and strong financial performance. The company’s stock has appreciated approximately by 141.92% since our coverage as the software-driven growth thesis played out. Simeon McMillan shares a similar view but emphasizes AppLovin’s lean operating model and capital discipline.

AppLovin Corporation is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 109 hedge fund portfolios held APP at the end of the second quarter which was 96 in the previous quarter. While we acknowledge the potential of APP as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

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Disclosure: None.