APP
AppLovin Corporation
$428.69
Platform & Compounding FCF
85%
Two-stage FCF DCF
Mild
·
Conviction
Overvalued
Trading 2.6% above fair value
You pay
$428.69
Bear
$255.75
Fair
$417.75
Bull
$604.22
Bear
$255.75
-40.3%
10% stage 1 growth, 12% discount
Fair
$417.75
-2.6%
17% stage 1 growth, 12% discount
Bull
$604.22
+40.9%
22% stage 1 growth, 12% discount
Key Value Driver
FCF growth rate (17% base case)
Terminal Value % of EV
40%
Implied Market Multiple
38.3x
Market is pricing in (growth)
19.7%
vs 16.6% base
Summary
Our base-case estimate uses a two-stage discounted cash flow model based on free cash flow. We then blend that result with the average analyst price target of $649.69 from 26 analysts, using a 25% weight on analyst consensus. That produces an estimated intrinsic value of $417.75 per share.
Warnings
Wall Street's average price target is $649.69 (from 26 analysts). Our estimate is 48% below the consensus -- consider that gap carefully.
Key Risks
- P/E alone misleads — earnings depressed by growth investment
- Cyclical or commodity businesses may be misclassified as platforms
- Terminal value dominance suggests sensitivity to long-run assumptions