amit
2026.08.17 18:17

$AppLovin(APP.US)

Talked to a former Applovin employee over the weekend, here’s some of his thoughts:

- Applovin’s business has been ads within mobile games. It is very profitable, 1B people per day play games, and $Meta Platforms(META.US) or $Alphabet(GOOGL.US) have not been able to break their moat. But, growth rates have slowed down from 70% to now 55% which is incredible, but not good enough for the street because they don’t see the TAM expanding yet.

- Mobile gaming opportunity is large but viewed as saturated and very high growth rates likely aren’t sustainable in this one category.

- Company has guided to keeping their growth at 30%+ but the decline in YoY growth rates have hurt sentiment. Applovin can change this by showing their Ecom expansion can increase the TAM but the company has failed to meaningfully show this which is why the stock has been stuck. The Q2 call didn’t really address the TAM expansion either which is why the stock has been falling so rapidly since then.

- He said management is exceptional and understands what they are doing, it’s not a team to bet against, but the problem is the street is not convinced their growth can expand beyond gaming yet. He himself is also not fully convinced and feels ready to sell a significant portion of stock if the Q after holiday season doesn’t show the TAM expanding beyond mobile games.

- He also said the short reports are pretty much just noise. Nothing ever serious has come from them and they aren’t rooted in anything real.

Stock is down 50% YTD…obviously looks like a bargain and I wonder how much lower the street can send it. Only major software large cap that hasn’t recovered…is anyone buying it here?

Source: amit

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