Bullish News Highlights AppLovin's Growth but Fails to Address Deep-Seated Valuation and Risk Concerns

What happened

A Seeking Alpha article published on January 15, 2026, recommends buying AppLovin, citing strong Q3 results with 68% year-over-year revenue growth and 82% EBITDA margins. The article emphasizes management's confidence in sustained high double-digit growth and stable margins, driven by the Axon engine and expansion beyond gaming into e-commerce. In contrast, DeepValue's master report maintains a STRONG SELL stance, noting the stock is severely overvalued at approximately 82x earnings and 100x EV/EBITDA, trading over 7x its DCF estimate. Critical risks from the report include dependency on Apple and Google platform policies, an active SEC investigation into data practices, and intensifying privacy regulations that could erode the business model. Despite the positive operational narrative, the current stock price near $686, up 98% in 12 months, embeds aggressive assumptions with little margin for error, overshadowing the near-term growth story.

Implication

The bullish news underscores AppLovin's strong execution but does not mitigate the extreme overvaluation identified in the DeepValue report, where the stock trades far above intrinsic value with embedded perfection. Regulatory headwinds, including the SEC probe and platform dependency, threaten long-term profitability and could trigger significant downside if adverse outcomes occur. While management's guidance for sustained growth and margins is optimistic, it fails to address the asymmetric risk profile, where any slowdown or regulatory action could lead to sharp multiple compression. Investors should monitor key catalysts like the resolution of the SEC investigation and margin sustainability, but the current risk/reward skew remains unfavorable. Therefore, maintaining a defensive stance is advisable until valuation resets lower or material risks are clarified, aligning with DeepValue's STRONG SELL recommendation.

Thesis delta

The bullish article does not shift the core investment thesis from the DeepValue report, which remains STRONG SELL due to persistent overvaluation and unaddressed risks. While operational performance is robust, it reinforces rather than alleviates concerns about price sustainability and external threats, keeping the thesis unchanged. Any potential upgrade would require a significant price decline or resolution of key risks, neither of which is indicated by this news.