Is AppLovin Corp. overvalued or undervalued?

As of 24 October 2025, the valuation grade for AppLovin Corp. has moved from expensive to very expensive, indicating a significant concern regarding its valuation. The company is currently overvalued, as evidenced by its high P/E ratio of 66, a Price to Book Value of 245.75, and an EV to EBITDA ratio of 50.94. In comparison, a peer like the average company in its industry has a P/E ratio of approximately 71.34, suggesting that AppLovin is not only expensive relative to its peers but also carries a higher valuation burden.
The company's impressive ROE of 370.23% and ROCE of 64.86% highlight its operational efficiency, yet these figures do not justify the extreme valuation ratios. Furthermore, AppLovin's stock has outperformed the S&P 500 significantly over the past year with a return of 289.94% compared to the S&P 500's 16.90%, but this performance does not mitigate the concerns surrounding its current valuation levels.