AppLovin: Some Strong Fundamentals, But A Premium Valuation Provides No Room For Error

Luke Zwynenburg
19 Followers

Summary

  • AppLovin's fundamentals are strong, but its premium valuation and high volatility make it too risky to buy at current levels.
  • Recent insider selling and a concerning balance sheet further increase uncertainty and downside risk for new investors.
  • Despite impressive revenue and earnings growth, the stock's inflated multiples are not justified compared to sector averages.
  • I recommend holding if you already own shares, but would not initiate a new position until risks subside or the price drops significantly.

Business Team Analyzing Interactive Digital Dashboards with Data Visualizations

sankai

Thesis

At the time of writing, AppLovin (NASDAQ:APP) is up more than 300% the past year and a staggering 1200% in just the past two years. However, recently the momentum has cooled, with the stock down 4% year to date. Despite excellent Q1 earnings, where the

This article was written by

19 Followers
Luke is an undergraduate business student. Luke is an active investor, mostly focusing on long-term equities, momentum, and value. He previously served as of the co-hosts of the Wall Street Insights Podcast found on Spotify, where interviewed financial professionals and discussed ways for students break into the industry. He writes about equities in the technology, financial, and industrial sectors. He analyzes equities based on company fundamentals as while as existing macroeconomic conditions. By writing on Seeking Alpha Luke hopes to dive deeper into the financial industry and to share his investment strategy.

Analyst’s Disclosure:I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

Recommended For You

About APP Stock

SymbolLast Price% Chg
Market Cap
PE
Yield
Rev Growth (YoY)
Short Interest
Prev. Close
Compare to Peers

More on APP

Related Stocks

SymbolLast Price% Chg
APP
--