Applovin Stock: Assessing the Valuation After a Stellar Rally

Applovin Corporation has delivered exceptional returns to investors this year, with its stock surging more than 90% amid spectacular quarterly performance. However, this impressive run has sparked intense debate among market participants: has the stock become overvalued following its substantial appreciation? Recent analyst assessments from November 15 and notable insider selling activity have brought this question into sharp focus.

The company's third-quarter results, announced in early November, demonstrate remarkable strength. Revenue skyrocketed 68% to reach $1.41 billion, while adjusted EBITDA surged 79% to $1.16 billion. The resulting EBITDA margin of 82% stands out as extraordinary, even within the high-margin software industry.

This impressive profitability stems primarily from Applovin's AI-powered advertising platform, which utilizes machine learning to optimize ad delivery for app developers, significantly outperforming traditional advertising networks. The company generated over one billion dollars in free cash flow during the quarter, with a substantial portion directed toward share repurchases. Management allocated $571 million to buybacks and expanded the existing repurchase program by an additional $3.2 billion.

Valuation Concerns Emerge Amid Strong Performance

Despite these strong fundamentals, Applovin's valuation metrics have raised eyebrows among analysts. With a forward P/E ratio of 58, the company trades significantly above comparable technology peers. Market researchers at Seeking Alpha cautioned in a comprehensive November 15 report that the valuation has "soared well beyond that of competitors," suggesting the market may have already priced in future growth expectations, thereby increasing the risk of potential disappointment.

Should investors sell immediately? Or is it worth buying Applovin?

Adding to the valuation concerns, institutional investor CFO4Life Group LLC recently reduced its position in the company. More notably, a significant insider transaction occurred on November 10 when Director Eduardo Vivas disposed of 150,000 shares valued at over $97 million. While such transactions don't necessarily indicate bearish sentiment, they often signal that company insiders are taking profits after substantial price appreciation.

Strong Guidance Faces Valuation Scrutiny

Looking ahead, Applovin has provided robust fourth-quarter 2025 revenue guidance ranging between $1.57 billion and $1.6 billion, representing sequential growth of 12% to 14%. The company expects to maintain its impressive EBITDA margin between 82% and 83%. Analyst consensus points to a price target of approximately $719, roughly 49% above current trading levels.

Nevertheless, the stock has retreated about 10% since the earnings release, indicating investor uncertainty about whether the company's fundamental strength can justify its premium valuation multiples. Market participants will be closely watching the next quarterly results, expected between February 11 and 17, 2026, as the debate between growth potential and valuation concerns continues to unfold.