Is AppLovin Corp. overvalued or undervalued?

As of 22 August 2025, the valuation grade for AppLovin Corp. has moved from fair to expensive, indicating a shift towards overvaluation. The company appears overvalued based on its high P/E ratio of 66, a Price to Book Value of 245.75, and an EV to EBITDA of 50.94. In comparison, a peer like AppLovin Corp. has a higher P/E of 71.34, suggesting that the market may be pricing in excessive growth expectations.
The company's impressive ROE of 370.23% and ROCE of 64.86% highlight its operational efficiency, yet these figures do not justify the current valuation levels. Additionally, AppLovin's stock has significantly outperformed the S&P 500, with a YTD return of 91.93% compared to the S&P 500's 12.22%, reinforcing the notion that the stock may be riding a wave of speculative enthusiasm rather than fundamental strength.