Is AppLovin Corp. overvalued or undervalued?

As of 31 October 2025, the valuation grade for AppLovin Corp. moved from expensive to very expensive, indicating a significant shift in its perceived value. The company is overvalued based on its current metrics, with a P/E ratio of 66, a Price to Book Value of 245.75, and an EV to EBITDA ratio of 50.94. In comparison, its peer, which has a P/E ratio of 71.34 and an EV to EBITDA of 56.00, suggests that AppLovin is still positioned at a premium despite the high valuations across the board.
The company's strong ROE of 370.23% and ROCE of 64.86% highlight its profitability; however, these figures do not justify the elevated valuation ratios. While AppLovin has outperformed the S&P 500 with a remarkable 1Y return of 276.25% compared to the index's 19.89%, the current valuation metrics indicate that the stock may not be sustainable at these levels.