---
ticker: "APP"
company: "AppLovin Corporation"
date: "2026-10-15"
view: "Strong Buy"
fair_value: 503.82
price: 279.2
price_source: "last trade"
price_time: "2026-10-15T19:59:59Z"
price_vs_fair_value: "-44.6%"
bear: 223.46
bull: 823.79
exit_price: 701.33
restated: "2026-10-26"
method: "case-spread-2026-10-24"
original_fair_value: 476
original_view: "Buy"
page: "https://alpha.dming.si/research/2026-10-15-app"
---

# APP · AppLovin Corporation · Strong Buy

Research report as of 2026-10-15, partly unblinded. Page: https://alpha.dming.si/research/2026-10-15-app

We value APP at $504 a share. The report's $279.20 price (Oct 15, 2026) was 45% below fair value: Strong Buy.

_Restated Oct 26, 2026 (method case-spread-2026-10-24); the report's original value was $476, Buy._

| Lens | Range | Marks |
| --- | --- | --- |
| Our report | $223 to $824 | fair $504; original $476 |
| Street targets (23) | $325 to $790 | average $512, median $490 |
| Price | | $279.20 |

Bands run from our bear to bull (the hollow mark is the original $476) and the Street's low to high. Street targets forecast future prices, not value today. Market data, captured Oct 16, 2026.

| Figure | Value |
| --- | --- |
| Fair value | $504 |
| Price | $279.20 (market data, Oct 15, 12:59 PM PT) |
| Five-year return | 26.0% (a year, at the report's price) |
| Bear / bull | $223 / $824 |
| Exit price | $701 (on Dec 31, 2031) |
| Confidence | 25% |

_This text argues the original call. The current figures are at the top._

**Original call, Oct 15, 2026 (before the Oct 26, 2026 restatement)**

_As of 2026-10-15 · partly unblinded: we committed and pushed the model in at 13:09:23 PDT, before reading any APP quote, multiple, estimate, target, headline or Alpha rank (the "blind" model). It is only partly blind because we were exposed to the price range: through training memory of the 2024-25 range, and through filing amounts that imply average prices, the latest a 1H26 repurchase average near $460 (assumptions.md); the saved 2Q26 release also implies about $480-500 for 2Q26 alone. We first read the price just after the push, about 13:10 PDT. Revised after the second review (section 9): the blind central value was $482 and is now $476; the case-weighted value was $462 and is now $410, with a fourth, shock outcome. All values US dollars per diluted share (336.5M shares). Continuing operations only: the Apps business was sold on 2025-06-30._

- **Fair value today:** $476 per share (cost of equity 10.80%); $410 weighting the four cases shock/bear/central/bull 10/25/45/20 (our weights)
- **Price:** $279.20, last trade, 2026-10-15 19:59:59 UTC (the close) → upside 70% to central, 47% to the weighted value
- **Five-year exit price:** $646 at 2031-12-31 (the median of three estimates: a judged exit multiple of 18x gives $646, the long fade $545, the outside view $704; defined below the block)
- **Five-year return:** 24.3% a year from $279.20, including distributions (buybacks)
- **Purchase price:** $452: the price at which the central case earns our required 12% a year (the 12% is a house placeholder)
- **Bear / bull today:** $208 / $665, each a single consistent business outcome; the shock outcome is $114
- **Confidence:** 25% (subjective, not calibrated): our chance that the 2031 value lands within 20% of $646 either way
- **Moat:** The MAX mediation layer (the software games use to run the auction for their ad space) sits inside the games that use it and feeds the AXON ad model; 76% GAAP operating margin in 2025 on almost no capital. Cost: the data passes through publishers' apps (see the Unity ruling, section 6) and Apple's and Google's privacy rules
- **Market expects:** On our central earnings, an exit at 8.6x 2032 NOPAT (net operating profit after tax; ours 18x, bear 13x). At our 18x, with distributions following, growth about 12 points a year below central: 2032 NOPAT $6.4B, 20% above 2026's $5.3B. With profit flat on 2026, a 23x exit. Or central at a 24.3% cost of equity. The price is a 73/27 bear/central mix
- **Key driver:** Revenue growth 2027-32: ±3 points a year is −$61 / +$68. Next, the judged multiple: about $21 a turn (15x $412, 21x $538 if it alone set the exit). The beta choice is larger: APP's own 2.55 instead of the peer 1.36 (beta measures how strongly a stock moves with the market) is −$89. Platform, regulatory and legal risk is charged once, in the shock outcome (10%); competitive saturation in the bear
- **Alpha model:** Capfolio's stock-ranking model: rank 179 of 709 (tier Above Average, score 74.9, as of 2026-10-14; rerate required): quality A (#17), growth B, momentum E (#683), valuation C, expectations D. Integrity WARN (3 warnings). We differ because Alpha's 126-day horizon reads the falling price and estimate revisions; our five-year value reads the same earnings the Street has
- **Street:** Street target median $490, mean $512 (range $325-790), fetched 2026-10-15 after the blind push. Cuts in headlines: Morgan Stanley $450→400 (10-13), Goldman $465→400 and Wedbush $610→560 (10-14), Jefferies $550→375 (week to 10-12); BofA and Wells Fargo downgrades (week to 10-05). Street mean EPS 2026 $15.75 (20 analysts), 2027 $20.06 (21). An expectations reference, not validation

**We rate AppLovin a Buy, with low confidence, at $279.20.** Our central fair
value is $476 a share, 70% above the price; weighting in a 10% chance of a
platform, regulatory or legal shock and a 25% chance that growth stalls gives
$410, still 47% above it. We would buy below $452, the price at which the
central case earns our required 12% a year.

**How to read the cases.** Each report values a company in several cases. The
central case is our best estimate. The bear case is a severe but plausible bad
outcome, here "saturation": AppLovin's share of game ad auctions stops rising
and rivals bid harder. The bull case is the matching good outcome. This report
adds a fourth, the shock case: a platform, regulatory or legal event cuts the
data AppLovin's ad model uses. We weight shock/bear/central/bull 10/25/45/20;
the weights are ours. The exit price is our estimate of the stock's value on
2031-12-31, the median of three methods: a multiple we judge fair (18x 2032
NOPAT, net operating profit after tax), the "long fade" (which lets returns on
new capital drift down toward its peers' over time), and the "outside view"
(what mature ad companies trade at). Cost of equity (10.80%) is the yearly
return investors require; we discount future cash to today at that rate.

AppLovin runs the auction (MAX) that most large mobile games use to sell
their ad space, and the ad network (AppDiscovery, driven by the AXON model)
that buys most of it for advertisers. 2Q26 revenue was $1.92B, up 53% a
year, at an 84% adjusted EBITDA margin; management guides 3Q26 to $2.06-2.09B.
Our central case grows revenue from $8.2B in 2026 to $18.5B in 2031 as gaming
slows to single digits and web advertisers (e-commerce, now open to self-serve)
grow to a third of revenue, with the operating margin easing from 77% to 72%.
That is worth $476 a share at 18x 2032 operating profit after tax, below the
mature ad peers' 19.7x. Our revenue is within 2% of the Street's through 2028
and our EPS within 7% (at a lower margin than the Street's), and our value is
near the Street's median target ($490). Weighting in a 10% chance of a
platform, regulatory or legal shock ($114) and a 25% chance of saturation
(the bear, $208) gives $410. The price, $279, is 14x our 2027 earnings: it
pays for a business whose profit grows little after 2026, close to our bear,
and is 34% above it. The market's reasons are recent
and specific, though most are press or analyst claims rather than filings
(section 6): a court's refusal on 2026-10-01 to stop Unity bidding in MAX
while their data dispute goes to arbitration, channel checks that MAX's share
has hit a ceiling, the first quarter in eight that missed its own guide
midpoint, a county lawsuit on children's data and a new securities class
action. None of it is yet in a filed number. We have no information edge; the call is that the
price already charges the bear case at 73% weight, against a business that
guided its next quarter up 7-8% sequentially. Buy below $452 with low
confidence; the 4Q26 guide on 2026-11-04 is the first test (section 5).

## 1. AppLovin earns from an ad auction and an ad network, at an 84% adjusted EBITDA margin

- **Who pays.** Advertisers pay AppLovin per install or per purchase; AppLovin
  pays publishers for the impression and keeps the spread (revenue is
  reported net of what publishers receive for its own network). Mobile game
  studios are most of the buyers. Since late 2024 web advertisers
  (direct-to-consumer brands, "consumer" in management's word) buy through a
  pixel on their sites; the self-serve AppLovin Ads Manager opened to the
  public in 2Q26, sequenced to mid-market advertisers first with the long
  tail later (management claim, 2Q26 call).
- **Why it wins.** MAX mediation sees the bids of every network in the games
  that use it (the company's description; we have no count of its share), so
  AXON trains on a wide view of what an install and a purchase are worth.
  Reported proof (10-Q 2Q26 MD&A and cost note): net revenue per install +58%
  in 2Q26 with installs −2%; adjusted EBITDA margin 82% in 2025 and 84% in
  2Q26; investing outflows of $7.7M in 1H26 (compute is rented: $181.0M of
  datacenter cost in 2Q26).
- **What limits it.** (a) Gaming ad budgets: installs fell in 2Q26, so growth
  came from price, which a ceiling on MAX share would stop (an outside view from
  Edgewater, a third-party research firm, not a filing). (b) Access to data that passes through
  publishers' apps: rivals' SDKs (software kits built into apps) can read it (the Unity dispute),
  and Apple's App Tracking Transparency (ATT) and Google's privacy changes set
  the rules (10-K risk factors).
  (c) Web advertisers can buy the same people on Meta and Google; AppLovin's
  pitch is incremental reach in games.
- **Capital.** $3.55B of notes (5.1-6.0%, 2029-2054), $3.05B cash (2026-06-30),
  $1.0B revolver undrawn; net leverage target about 1x (management). Buybacks
  of about $1.5B in 1H26 (10-Q) roughly offset stock pay; the model holds the
  count flat and expenses stock pay ($86M in 2Q26).
- **History is split** in the 10-K: Apps (first-party games, $1.4-2.1B of
  revenue a year in 2021-24) is discontinued; 2023-25 continuing lines come
  from the FY2025 10-K, 2021-22 from the advertising segment. Revenue grew
  56%, 76%, 75% and 70% a year in 2022-25 (`output.txt`).

## 2. 2Q26 was the first quarter in eight to land below the guide's midpoint

The guidance record (8-K releases, eight quarters, printed by `model.py`):

| Quarter | Revenue guide | Actual | vs midpoint | Adj. EBITDA vs midpoint |
| --- | --- | --- | --- | --- |
| 3Q24 (total co.) | 1,115-1,135 | 1,198.2 | +6.5% | +12.8% |
| 4Q24 (total co.) | 1,240-1,260 | 1,372.8 | +9.8% | +13.1% |
| 1Q25 | 1,030-1,050 | 1,159.0 | +11.4% | +15.7% |
| 2Q25 | 1,195-1,215 | 1,258.8 | +4.5% | +3.9% |
| 3Q25 | 1,320-1,340 | 1,405.0 | +5.6% | +7.2% |
| 4Q25 | 1,570-1,600 | 1,657.9 | +4.6% | +7.2% |
| 1Q26 | 1,745-1,775 | 1,842.4 | +4.7% | +5.2% |
| 2Q26 | 1,915-1,945 | 1,923.7 | −0.3% | −1.0% |

Seven quarters above the top of the range, then 2Q26 inside it and just
below the midpoint: the beat shrank from about 10% to zero. Management's
explanation (2Q26 call, a management claim): the quarter "came down to
timing", the next model improvement "landed just after quarter end", MAX
publisher earnings grew double digits sequentially and AppLovin's "share of
publisher waterfalls remained consistent"; the 3Q guide, unusually, includes
improvements already live and higher compute cost. Because that guide
already counts the improvements, the revised 3Q26 forecast is the guide
midpoint ($2,070M); the blind model added half the last-four median beat
($2,118M), which the audit reviewer (an outside reviewer who checked our numbers and logic) rightly questioned after a miss (−$6). The
4Q26 forecast is 3Q × 1.15 ($2,381M; 4Q over 3Q was 1.18-1.20 in 2024-25).
Edgewater's channel checks (reported 2026-09-23) put 4Q at +8-9%
sequential; that would take 2026 revenue to $8,082M and fair value to $468
(`unblinded-output.txt`). Ours, $8,217M for 2026, is 1% above the Street's
$8,123M.

## 3. Our forecast: revenue of $18.5B in 2031 is worth $476 a share

`model.py`, output in `output.txt`; the blind
record in `assumptions.md`. The company reports one
segment and no revenue split, so the two lines are ours: gaming and
consumer (web), with the 2026 consumer share of 14% inferred from
management's "billion-dollar run rate" and "that sort of 10% range" in 2025
(management claims, 1Q25 and 2Q25 calls). Margin is one path, because no
profit by line is reported.

| Case (weight) | 2027 growth | 2031 revenue | Consumer share 2031 | 2031 op. margin | 2031 EPS | Judged / fade / outside | Exit | Fair value |
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Shock (10%) | −6.5% | $7.9B | 20% | 55% | $10.76 | $117 / $121 / $218 | $121 | $114 |
| Bear (25%) | +13.5% | $11.3B | 21% | 63% | $17.62 | $243 / $218 / $361 | $243 | $208 |
| Central (45%) | +27.0% | $18.5B | 32% | 72% | $32.84 | $646 / $545 / $704 | $646 | $476 |
| Bull (20%) | +35.5% | $22.5B | 36% | 77% | $42.86 | $1,046 / $836 / $935 | $935 | $665 |

- **Central.** Gaming +20% in 2027 slowing to +6% by 2032, below
  management's 20-30% long-term claim, because 2Q26 installs fell and the
  growth was price. Consumer +70% slowing to +14%. Operating margin after
  stock pay 76% easing to 72% (compute grows with revenue; web needs sales
  spend gaming did not). Tax 16-17%. 2031 revenue is $18.5B, against
  management's 25-30% compounding ($25B+).
- **Bear: saturation.** Gaming +10%, +5%, then +3%; consumer +35% to +5%;
  margin to 63%. MAX's share stops rising, Unity and Google bid harder in its
  auctions, the take rate and model edge erode. NOPAT is flat from 2027 to
  2031.
- **Shock (added after review).** A platform, regulatory or legal event cuts
  the data AXON uses (Apple or Google rules, children's-data enforcement,
  rivals reading MAX): gaming revenue falls 10% in 2027 and 5% in 2028,
  consumer grows 15% then low single digits, margin falls to 55%, exit at
  10x. The blind bear carried this label but its numbers are a slowdown; the
  shock was printed only as an unweighted stress. Weight 10% (our
  assumption: the pending children's-data suit, the Unity arbitration and
  the platform rules are live, none has yet cut a reported number). The
  weights moved from 25/50/25 to 10/25/45/20: the shock takes 5 points from
  central and 5 from bull, because a world with that event has no bull path.
- **Bull.** Just under management's pace (22.4% a year 2026-31 against
  their 25-30%): gaming +25% to +8%, consumer +100% to +15%, margin 77-78%.
- **Exit multiples** are judged from the mature ad peers' forward P/E
  (median 19.7x; Meta 21.6x, Alphabet 22.9x) and our own long fade (15.2x on
  central 2032 NOPAT): central 18x sits between them; bear 13x; bull 22x.
  The blind record also gave "a single product line" as a reason for 18x
  over 19.7x; our report checklist (research-eval) rightly read that as concentration
  risk, which the shock and bear outcomes charge. At 19.7x the central value is $509
  (+$33). We keep the blind 18x as the headline and price the alternative
  here. The bear-side reviewer (an outside reviewer asked to argue the bear side)
  argues 16x (our fade 15.2x; peers 17.5x on FY2028 EPS): −$42 alone; rejected, because the fade already sets the long-fade
  method's value and taking 16x would put two of the three methods on the
  fade's assumptions. The
  printed cross-check says 18x implies 5.6% perpetual growth at a 60% return
  on new capital, below the path's 8.5% in 2032 and 7.7% in 2033: the
  multiple is conservative against the path, as the fade's 3.5% end point
  implies. The value-driver formula gives 19.5x / 12.1x / 29.1x, a
  cross-check only. In the bear the outside view ($365) sits 48% above the
  median: the peer multiple is for growing companies and the bear has
  stopped growing, so the judged multiple and the fade are believed there.
- **Peer multiples.** The FY2027 EPS some peers carry is odd (Alphabet $20.58
  in 2026, $15.25 in 2027, $18.14 in 2028; The Trade Desk similar). On FY2028
  EPS the peer median is 17.5x, the outside view $624 becomes the median, and
  fair value is $463 (−$13).
- **APP's own multiple history** was not used blind (it needs the price);
  after the blind commit it reads 31x at the end of 2024 and 43x at the end
  of 2025 on the next year's NOPAT (market data enterprise value, hindsight NOPAT).
  It does not argue for a lower multiple; it shows how far the market's view
  has swung (14x now).
- **Tax.** 16-17% book. 1H26 cash taxes were 21.8% of pre-tax income
  (timing of international payments, per the CFO). At 22% for 2027-32 the
  value is $447 (−$29).
- **Singapore incentive (added after review).** The 10-K (FY2025 Note 13)
  says the Singapore tax incentives cut 2025 tax by $272.1M (6.9 points,
  before US tax effects) and "are expected to expire in June 2028", which
  the company "can affirmatively elect to renew". Every case assumes
  renewal. The net effect visible in the 2025 rate reconciliation is about
  2.5 points (the Singapore rate difference and local rate, after the
  $82.7M Pillar 2 top-up). Not renewed from mid-2028: central $462 (−$14) at
  +2.5 points, $439 (−$37) at +6.9; case-weighted $399 and $379.
- **Consumer share.** The "billion-dollar run rate" in 1Q25 was about 22%
  of that quarter's annualised revenue, against the "10% range" claimed for
  2025, so the two quotes disagree (perhaps gross spend against net revenue;
  not stated). At 25% the value is $552; at 8% $434. The bear-side reviewer's 12%
  with slower growth (55% to 12%) is −$46 alone; rejected as a central
  case because management's latest figure (consumer spend 28% above 4Q25 in
  2Q26) points the other way, though both are claims, not reported lines.
- **Cost of equity 10.80%** = US 10-year 5.089% (market data, 2026-10-15) +
  beta 1.36 × 4.20% (Damodaran implied premium, 2026-10-01). The beta is the
  median of six ad peers' five-year weekly regressions; APP's own is 2.55,
  which gives 15.80% and $387 (printed). We use the peer median because a
  stock's own beta after a rise of about 10x in 2024-25 (training memory)
  and a fall of more than half in 2026 measures its price swings
  more than its business risk; the reader who prefers 2.55 still gets $387,
  39% above the price. The audit reviewer's ad-tech-only median (TTD, PINS, CRTO,
  MGNI) is 1.46, $467 (−$9); rejected, because the set was fixed blind and
  Meta and Alphabet are advertising businesses at APP's 2031 scale.
- **Where the platform, regulatory and short-seller risk is charged: once,
  in the shock outcome** (10% weight; the blind report said the bear, whose
  numbers did not carry it). Not in the discount rate, not in the central
  multiple, not as a legal deduction in the bridge (no loss is accrued,
  10-Q Note 5). Evidence counted: the 10-K risk factors, the pending
  securities case, and management's statement that the SEC's inquiry ended
  without action (CFO, 2Q26 call; a management claim, no SEC document). The
  2025 short-seller reports and the new lawsuits are allegations, not
  evidence of a loss.
- **Bridge at exit.** Enterprise value + 2026 year-end cash ($6.1B, after the
  guided 2H FCF) − operating cash (5% of 2031 revenue) + Tripledot and fund
  stakes at book ($483M) − notes $3,550M − leases $154M. FCF to equity in
  2027-31 ($131 a share, central) is treated as paid out in buybacks at
  intrinsic value.

## 4. The price needs profit that barely grows after 2026

`unblinded-output.txt`. Market value $94.0B; net of cash, stakes, notes and
leases the enterprise value is $94.1B: 17.6x our 2026 NOPAT and 14.1x 2027.
On our central earnings the price needs an exit multiple of 8.6x 2032 NOPAT.
At our 18x, with the distributions following the same lower path, it needs
growth about 12 points a year below central (+15%, +10%, +5%, +2%, −1%, −3%
in 2027-32): 2032 NOPAT of $6.44B, 20% above 2026's $5.35B and close to our
bear ($6.12B). With profit held flat at 2026's level it needs a 23x exit. Or
our central case at a 24.3% cost of equity. (The blind draft said "2032
profit flat on 2026" from a calculation that cut the exit but kept central
distributions; the audit reviewer caught it.) The Street's earnings are close to
ours (2027 EPS $20.06 vs $19.85; 2030 $29.78 vs $30.21), and its median
target ($490) is near our fair value: the gap is between the price and both
of us. The vendor's end-2025 market
value was $228B, against $94B today. The stock rose 6.5% today ($262.19 at
the 2026-10-14 close to $279.20) with no company news we found.

## 5. Why we disagree with the market, and what settles it

- **The market's thesis.** AppLovin's gaming engine has peaked: MAX's share
  has hit a ceiling, Unity now bids inside MAX and narrows the spread, and
  the web business started slower than claimed (a Wells Fargo note called
  the pixel's install spike "a false start"). Add legal overhang. On that
  view 2026 profit is roughly the peak.
- **Ours.** Growth slows hard (27% in 2027, 8.5% by 2032) but does not stop,
  because the 3Q26 guide is +7-8% sequential after +4% in 2Q26, consumer
  spend rose 28% in two quarters (management claim), and the cost base is
  almost all variable. Even the market's thesis, written as our bear, is
  worth $208, 25% below the price; the price only fails if profit falls,
  which our shock outcome (gaming −10% in 2027, margin to 55%, 10x) puts
  at $114, weighted at 10%.
- **The bear-side reviewer's case** (Hold to narrow Buy).
  Its five levers together give a central of $329 and a weighted $325, still
  above the price; each alone is in section 9. We reject the gaming, web,
  multiple and margin levers as a central case because their evidence is
  third-party channel checks (Edgewater, Wells Fargo on Similarweb data) set
  against reported 2Q26 revenue +53% and a company guide for 3Q +7-8%
  sequential, and because the bear-side reviewer's own search found Tenjin data showing
  share gains on iOS and Android in 2Q26. They are the bear's world, which
  we weight.
- **What settles it.** The 4Q26 revenue guide on 2026-11-04. At or above
  about $2,380M (+15% on a $2,070M 3Q) our central stands; below about
  $2,250M (+8.5%) the bear-side reviewer's $330 central becomes live and we would
  revise toward Hold. 3Q revenue against the $2,055-2,085M guide comes the
  same day; a 3Q below the range moves us toward the bear.
- **Our edge.** None on information. The call rests on price against a case
  already charged with the market's fears.

## 6. The risks that could make the market right

- **The Unity ruling may be structural, not a skirmish.** On 2026-10-01 a
  San Francisco Superior Court judge denied AppLovin's request for a
  temporary restraining order and preliminary injunction against Unity
  (Seeking Alpha, 2026-10-02; we did not read the ruling). AppLovin alleges
  Unity's Ad Quality SDK takes MAX data while Unity bids in MAX; Unity calls
  it a publisher-authorized tool; the merits go to private arbitration. If a
  rival can read MAX's auctions through a publisher-installed SDK, AXON's
  data edge narrows and the take rate with it (Wedbush's view). This is the
  bear's mechanism; it is not yet in a reported number.
- **Price per install cannot carry growth forever.** 2Q26 installs fell 2%
  while revenue per install rose 58%. Growth by price alone ends when
  advertisers' returns fall; the first guide miss in eight quarters may be
  that point.
- **Children's data.** San Diego County sued AppLovin (reported 2026-10-05)
  alleging it collected children's data and showed adult ads on children's
  devices. COPPA and state laws carry per-violation penalties and, worse,
  could limit the data AXON uses. Allegations only; the 3Q26 10-Q will say
  how the company accounts for it.
- **A new securities class action** (law-firm notices, class period
  2026-02-12 to 2026-08-05; the bear-side reviewer cites Talbot v. AppLovin,
  3:26-cv-10584, filed 2026-09-16) adds to the 2025 case. Settlements are usually
  small next to a $94B company; the cost is management time and the
  disclosures that discovery brings.
- **Our own exposure.** We saw a 1H26 average repurchase near $460 before
  the model was built, and the saved 2Q26 release (in the blind data) says
  1.1M shares cost $551.3M in 2Q26, about $480-500; our blind central value
  was $482. We cannot show that line was not read. The choices are sourced
  and the Street's earnings agree with ours, but the reader should discount
  the central value for anchoring (a first number seen pulls later ones toward it). The bear, which ignores it, is still
  close to the price.
- **Weights.** At shock/bear/central/bull 15/30/40/15 the value is $370
  (+32%); at the bear-side reviewer's bear/central/bull 40/45/15 it is $402 on the
  blind model; the price needs 73% on the bear and none on the bull or
  shock (`unblinded-output.txt`).

## 7. What to watch: dates and results that would change our view

- 2026-11-04: 3Q26 results and 4Q26 guide (company-announced date). Our
  3Q: revenue $2,070M (range $2,030-2,130: 2% below to 3% above the guide
  midpoint), adjusted EBITDA $1,718M (83% of our revenue; range
  $1,680-1,770). These ranges are in `record.json`. Our 4Q26 revenue is
  $2,381M.
- About 2026-11-05: 3Q26 10-Q legal note: San Diego County suit, the new
  class action, any regulator inquiry.
- Unity arbitration outcome (date not public).
- About 2027-02-11: 4Q26 results and the first 2027 outlook (date not
  confirmed; February in past years).

Falsifiers (results that would show us wrong):
- 4Q26 revenue guide midpoint below $2,250M: the bear-side reviewer's central (about
  $330) is live; revise toward Hold. 3Q26 revenue below $2,055M, or a 4Q26
  guide implying under +5% sequential: move toward the bear ($208).
- AppLovin does not elect to renew the Singapore tax incentive by June 2028
  (10-K tax note): $462 central at +2.5 points of tax, $439 at +6.9.
- Net revenue per install flat or down year on year in any 2027 quarter
  with installs still falling: the gaming engine has peaked; bear.
- A regulator (FTC, a state attorney general, the SEC) files an action on
  data use or disclosure, or the company accrues a loss: re-underwrite the
  shock outcome's weight.
- Consumer (web) revenue disclosed below 10% of 2026 revenue: the line is
  smaller than our 14% inference; $434 at 8%.

## 8. Data and tooling notes

- Market data quarterly statements mix total and continuing operations in 2024; the
  10-K's recast lines were used instead.
- `revenue-product-segmentation` gives one reportable segment for 2025; no
  gaming/web split exists in any source we could reach.
- The filter that hid price-bearing filing lines (`safe_cat.py`) missed
  shares-withheld and repurchase lines on first use; the leak is disclosed
  above and in `assumptions.md`.

## 9. Two reviews moved the central value from $482 to $476 and the weighted value from $462 to $410

### Second review: an audit reviewer and a bear-side reviewer (2026-10-15)

After the blind report, two outside reviewers read it. The audit reviewer checked
its numbers and logic. The bear-side reviewer argued the case for Hold.

| | Blind (0177a12) | Revised |
| --- | --- | --- |
| 3Q26 revenue | $2,118M (midpoint + half the recent beat) | $2,070M (guide midpoint) |
| 2026 revenue | $8,320M | $8,217M |
| Outcomes and weights | bear/central/bull 25/50/25 | shock/bear/central/bull 10/25/45/20 |
| Central fair value | $482 | $476 |
| Case-weighted | $462 | $410 |
| Bear / bull / shock | $210 / $674 / unweighted stress $115 | $208 / $665 / $114 |
| Exit price | $654 | $646 |
| Purchase price | $458 | $452 |
| Five-year return | 24.7% | 24.3% |

Each finding measured alone from the blind model (`unblinded-output.txt`,
"Review findings, each measured alone"):

| Finding | Central alone | Weighted alone | Answer |
| --- | --- | --- | --- |
| Audit: weights leave out the shock the report says the bear charges | 0 | −$46 (10/25/45/20); −$88 (15/30/40/15) | Accepted: shock is a fourth outcome at 10%, bear relabelled as saturation |
| Audit: Singapore incentive expires June 2028; 17% assumes renewal | −$14 (+2.5 pts net); −$38 (+6.9 gross) | −$13; −$36 | Partly: renewal stays the assumption (the company can elect it), now stated, sized and a falsifier |
| Audit: "2032 profit flat on 2026" kept central distributions while cutting the exit | none | none | Accepted: rebuilt with distributions following the lower path (+20% on 2026 at 18x; 23x if flat) |
| Audit: ad-tech-only beta 1.46 | −$9 | −$8 | Rejected: peer set fixed blind; Meta and Alphabet are ad businesses |
| Audit: 3Q beat assumed after a miss | −$6 | −$6 | Accepted: the 3Q guide already counts the live model improvements (CFO, 2Q26 call) |
| Bear-side: gaming after MAX saturation (15/10/7/5/4/3, 4Q +11%) | −$67 | −$39 | Rejected as central; it is the bear's world, weighted 25% |
| Bear-side: web share 12%, slower growth | −$46 | −$30 | Rejected as central; both shares are inferences, the latest claim points up |
| Bear-side: exit multiple 16x | −$42 | −$21 | Rejected; 18x sits between the fade and peers |
| Bear-side: margin 75% to 70% | −$12 | −$6 | Rejected; central already falls 77% to 72%, and the 3Q guide is 83% adjusted EBITDA |
| Bear-side: weights 40/45/15 | 0 | −$60 | Partly, through the audit's weights finding |
| Bear-side reviewer's five together | −$153 ($329) | −$137 ($325) | Still above the price; the 4Q guide decides |
| Audit's weights and 3Q beat findings together (the revision) | −$6 | −$51 | |

Nothing moved toward the price without a stated cause. The weights finding corrects a risk
the blind report claimed to charge and did not; the 3Q beat finding applies a fact from the
blind reading (the guide already counts the improvements) that the blind
model ignored. The rejected levers are all priced above.

### First review: our report checklist (2026-10-15)

One pass of our report checklist (research-eval), run by a Claude Sonnet agent
on draft 7f9ccd1, 2026-10-15. No
hard FAIL changed a headline figure; the model and its blind record were
unchanged. Every finding and its answer; the dollar effects were measured
on the blind model (the revised model's are in `unblinded-output.txt`,
"Research-eval alternatives").

| Finding | Effect | Answer |
| --- | --- | --- |
| Central 18x was partly justified by "a single product line", a concentration risk the bear already charges (risk charged twice) | +$34 at 19.7x | Accepted. Reason restated (18x sits between our fade, 15.2x, and the peers, 19.7x); headline kept at the blind 18x; $516 printed |
| Report said "18x for 8% growth at exit"; the model prints 5.6% implied growth | none | Fixed: the 5.6% and the gap to the path are stated |
| Peers' FY2027 EPS paths are odd (Alphabet, The Trade Desk) | −$13 on FY2028 EPS | Disclosed with the FY2028 value ($469); FY2027 kept, it was fixed blind |
| Book tax 16-17% against 21.8% cash taxes in 1H26 | −$29 at 22% | Disclosed; the CFO calls it timing, and 2026 FCF already uses his 75% conversion |
| Consumer share: the $1B run-rate quote implies about 22%, the "10% range" quote 10% | +$77 at 25% | Disclosed; 14% kept as the blind inference |
| A saved 2Q26 release line implies a 2Q26 buyback average near $480-500, close to the $482 value; not in the exposure list | none | Disclosed in the decision block and section 6 |
| Quote file said "read 20:08 UTC", before the 20:09:23 UTC push | none | Corrected: 20:08:32 is the venue's quote time; the read followed the push in this session |
| Text errors: "earnings within 3%" (EPS is within 6%), "25% above" the bear (33%), "21 analysts" for 2026 (20) | none | Fixed |
| News treated as more than claims ("reasons are real"; injunction vs restraining order; "reads bid data") | none | Relabelled as press and analyst claims and AppLovin's allegation |
| Management's explanation of the 2Q26 miss was missing | none | Added in section 2 as a management claim |
| Self-serve "opened to all" overstates the call | none | Fixed: public launch, mid-market first |
| Bull called "management's path" (22.4% a year against their 25-30%) | none | Relabelled |
| Bear outside view 48% from its median not explained in the report | none | Explained in section 3 |
| Alpha rank given without why we differ; output not saved | none | Added; saved as `data/alpha-rank.json` |
| Key driver omitted beta, a larger swing (−$90 at 2.55) | none | Added to the decision block |
| Street targets and broker moves undated; price move without closes | none | Dated; closes given |
| Install, datacenter and run-rate facts not in saved files | none | Cited to the 10-Q 2Q26 MD&A and cost note (accession in `assumptions.md`); the run-rate quotes came from Bigdata passages, not saved |

The two-reviewer adversarial review (the audit reviewer and the bear-side
reviewer) was run by the coordinating agent that briefed the analyst; the
second review above answers it.

## 10. What slowed the work (friction log)

- Bigdata (`bigdata_search`), three calls, the trial limit:
  1. Smart search on the e-commerce run rate: found the June 2026 Nasdaq
     conference passage (2026 at about $8B; "25% compounding for 10 years").
     Market data also lists that conference and we did not try its
     transcript there, so this may not have been new.
  2. Fast search: returned nothing.
  3. Smart search on the "$1 billion run rate": found the 1Q25 and 2Q25 call
     passages. Market data holds those transcripts; Bigdata located the
     quotes faster but found nothing new.
- The price filter leaked (section 8); a tighter pattern list was added
  mid-task, after the 10-K equity statement and the 2Q26 10-Q equity note
  had been seen.
- Damodaran's home page is a frameset; the premium is on
  `New_Home_Page/home.htm`.
- The 1Q26 market data transcript was too large for one tool result and had
  to be converted from its saved JSON.
- The worktree guard refused `find -exec` and a write to the shared
  checkout path; plain commands worked.
- The full 10-K and 10-Q texts (1.9 MB) were left out of `data/` and are
  listed by accession number in `assumptions.md`.

## 11. Sources (all read 2026-10-15)

- SEC EDGAR, CIK 1751008: 10-K FY2025 (0001751008-26-000010), FY2024, FY2023;
  10-Q 2Q26 (0001751008-26-000059), 1Q26 (0001751008-26-000044); 8-K
  earnings releases and shareholder letters 2Q24-2Q26; 8-Ks 2025-06-30 (Apps
  sale), 2026-04-02 (management changes). Saved in `data/` except the 10-K
  and 10-Q texts.
- 1Q26 and 2Q26 call transcripts (market data documents), `data/`.
- Market data: income, balance sheet and cash-flow statements; revenue segmentation;
  peer quotes and FY2027 estimates (13:01 PDT); weekly returns for betas.
  After the blind commit: APP analyst estimates, price-target consensus,
  key metrics.
- Market data TVC:US10Y (5.089%, 20:05 UTC). Damodaran implied ERP
  (2026-10-01).
- Market quote, read about 20:10 UTC (`data/quote-2026-10-15.json`).
- News feed (after the blind commit, untrusted, press and analyst
  claims): Seeking Alpha on the Unity ruling (2026-10-02); market data weekly
  recaps (2026-10-05, 2026-10-12); Stocktwits on Edgewater (2026-09-23);
  Business Wire, 3Q26 date (2026-10-07); Dow Jones target-change headlines
  (2026-10-13/14); Kirby McInerney class-action notice headline (2026-10-15).
- Bigdata `bigdata_search`: three calls (section 10).
- Alpha: `alpha rank APP --raw --json --allow-stale-model-cache`, as of
  2026-10-14.