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AppLovin Corporation (APP) Intrinsic Value

DCF-based fair value calculation with Bear, Base, and Bull scenarios

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AppLovin Corporation (APP)

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Intrinsic Value (DCF)

Current$658.65
→
Intrinsic$222.45
-66%
$146.09$222.45$374.14
Current price reflects execution expectations above 25% growth — not unreasonable for quality businesses.
Range: Bear $146 → Bull $374. Current price implies expectations above the base case, closer to bull expectations.
Current price reflects assumptions at the upper end of our valuation range (bull case: $374).
Discount ↓Growth →21%23%25%27%
8%$284$308$333$360
10%$190$206$222$240
12%$140$152$164$177
14%$110$119$128$138

Bull Case

  • Bull case ($374) with 30% growth, 8% discount rate

Bear Case

  • Bear case ($146) implies 78% downside at 20% growth, 12% discount
  • Trading 66% above base case — execution must exceed assumptions to justify
  • Price exceeds bull case ($374) — requires exceptional execution
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5-Year Free Cash Flow Projection

Year 1$2.62B
Year 2$3.27B
Year 3$4.09B
Year 4$5.11B
Year 5$6.39B
Terminal$101.27B

📐 Model Inputs

Growth Rate25.0%5Y CAGR (cascade: 5Y→3Y→TTM)
Discount Rate9.5%WACC estimate
Terminal Growth3.0%Perpetuity rate
Base Free Cash Flow$2.09BTTM actual
Bear g×0.8, r+2%
Base Historical CAGR
Bull g×1.2, r−1.5%
ℹ️

DCF estimates based on historical growth rates extrapolated forward. See FAQ below for full methodology.

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Frequently Asked Questions

Is APP stock undervalued or overvalued?
🔴 OVERVALUED

APP trades at $658.65 vs. our DCF-derived intrinsic value of $148.77, implying -76% downside. Using a 9.5% WACC and 25.0% FCF growth assumption, the current price requires growth rates above our estimates to be justified. Even our bull case ($224.61) suggests limited upside.

What is APP's intrinsic value?

Using a 5-year DCF model: Base FCF of $2.09B, projected at 25.0% 5Y CAGR (best of revenue, EPS, or FCF growth), discounted at 9.5% WACC, with 3.0% terminal growth. Terminal value calculated via Gordon Growth Model: TV = FCF₅ × (1+g) / (WACC−g). After deducting $2.81B net debt and dividing by 0.35B shares: Bear $97.03 | Base $148.77 | Bull $224.61. Current price $658.65 implies -76% to base case.

How is APP's fair value calculated?

DCF Methodology:

① Project FCF years 1-5 using 25.0% growth derived from 5-year historical CAGR (best of revenue, EPS, or FCF growth, with 8% floor and 25% cap).

② Calculate terminal value at year 5 using perpetuity growth model with g=3.0%.

③ Discount all cash flows to PV using WACC=9.5%.

④ Sum PV of explicit period + PV of terminal value = Enterprise Value ($54.56B).

⑤ Subtract net debt, divide by shares outstanding.

Sensitivity analysis available above—adjust WACC ±2% or growth ±3% to stress-test the valuation. Implied EV/FCF multiple: 26.1x.