Ricardo Pillai
3 min read
In This Article:
We came across a bullish thesis on AppLovin Corporation on Elliot’s Musings’ Substack by Elliot. In this article, we will summarize the bull’s thesis on APP. AppLovin Corporation's share was trading at $324.70 as of June 20th. APP’s trailing and forward P/E were 58.72 and 54.35 respectively according to Yahoo Finance.
A marketing manager looking at the data dashboard of a marketing automation software showing successful campaign results.
AppLovin (APP) has staged a historic rally since bottoming at just over $9 in December 2022, closing recently at $290—a more than 30x return. The initial bullish thesis in mid-2023 centered on the company’s pivot from legacy app operations to a high-margin software business, underpinned by the rollout of its AXON 2 advertising platform. AXON’s efficiency, self-learning capabilities, and fixed-cost model enabled massive EBITDA margin expansion, with incremental margins reaching 85% and platform-adjusted EBITDA margins hitting 78% as of 3Q24.
Initially dominant in mobile gaming, APP diversified AXON into e-commerce and web advertising by 2024, surpassing expectations and setting the stage for broader adoption. This shift transformed the company’s financial profile, with Software Platform revenue surging 66% year-over-year to comprise 70% of total sales, while overall 2024 revenue and EBITDA estimates leapt from $3.1B and $1.3B to $4.6B and $2.6B, respectively.
These drastic upward revisions, paired with a tripling of valuation multiples, fueled the stock’s explosive gains. The author, despite earning a 340% return, exited too early by underestimating the durability of APP’s margins and conservatively modeling its valuation. A mix of anchoring to consensus, underweighting anecdotal evidence of AXON’s dominance, and psychological pressure to lock in gains led to a premature exit.
Today, APP trades at ~25x 2026 EBITDA, which appears reasonable given its 70 %+ EBITDA margin, 40 %+ FCF margin, and strong growth. While the author questions the long-term defensibility of APP’s moat, the company’s transformation offers a rare case study in how underappreciated margin expansion and sentiment shifts can drive exceptional stock performance.
Previously, we covered a bullish thesis on AppLovin Corporation by Jimmy Investor in March 2025, which highlighted the company’s AI-driven AXON platform and shift to high-margin software. The company’s stock price has appreciated by approximately 26% since our coverage. This is because the thesis played out. Elliot shares a similar view but emphasizes margin mis-modeling and investor sentiment shift.
