Buffett Brain · Research note
Score updated 26 Sept 2026
APP· Communication Services
AppLovin
AppLovin's 87.9% gross margin and 59.3% ROIC indicate a strong moat, but a P/E of 34.9 suggests valuation concerns.
Buffett fit
Strong fit
Owner
93
Durability
68
Management
82
Price
12
Score updated 26 Sept 2026
Buffett's checklist
Each number against Buffett's bar, and where it ranks among Communication Services stocks in our database.
How much profit the business makes on each dollar invested in it. Higher is better.
What is left of each sale after the cost of making the product. A high number often means pricing power.
The cash the business earns for its owners, compared with the price of the whole company.
How fast sales grew each year over the last five years.
How many years of today's profit you pay for at today's price. Lower means cheaper.
How much the company owes compared with what it owns outright. Lower is safer.
The four pillars
How the business measures up on each of Buffett's four tests.
Owning AppLovin would mean benefiting from its high of 59.3% and strong , evidenced by its 87.9% .
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AppLovin's high and margins suggest a durable business, yet the EPS CAGR of 2.17% raises concerns about growth sustainability.
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Management has reduced share count by 2.73% annually, indicating a focus on enhancing shareholder value.
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The current earnings yield of 2.86% and yield of 3.38% are low, indicating the stock is priced for high growth.
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- The 5-year price target and the return it implies
- What would change the call
- Graham, Lynch and Greenblatt on the same stock
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For and against
The strongest points on each side, with the numbers behind them.
In its favor
8- 1 of 87.9%, well above the sector's top-quintile cutoff of 74.1%
- 2 of 59.3%, indicating strong capital efficiency
- 3 of 75.8%, highlighting operational excellence
- 4Net margin of 60.8%, reflecting strong profitability
Concerns
8- 1 ratio of 34.9, indicating high market expectations
- 2EPS CAGR of 2.17% over 5 years, suggesting slow earnings growth
- 3Profitable in only 4 of the last 5 years, raising durability concerns
- 4High EV/Sales ratio of 32.82, suggesting overvaluation
Price history
$268+210.7%· 5-year return
Weekly closing prices. Touch or hover the line for a date.
The business
How the business works
AppLovin provides AI-powered advertising solutions through its Advertising and Apps segments. It offers products like Axon Ads Manager and MAX, which optimize ad inventory value. The company generated $5.48B in revenue with a 60.8% net margin, indicating strong profitability. Its unit economics are robust, with a 59.3% , well above the sector's top-quintile cutoff.
How this analysis has moved
The call has held across 2 reviews.
Sep 27, 2026 → Oct 4, 2026
What other investors would say
The same company, judged by three other documented playbooks.
Keep researching
Similar companies in Communication Services
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