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 concern regarding its valuation. The company is overvalued based on its current metrics, which include a P/E ratio of 66, a Price to Book Value of 245.75, and an EV to EBITDA of 50.94. In comparison, its peer, which has a P/E ratio of 71.34 and an EV to EBITDA of 56.00, also reflects a high valuation, but AppLovin's ratios suggest it is trading at a premium.
Despite its impressive returns, including a 1Y return of 272.21% compared to the S&P 500's 19.89%, the elevated valuation ratios indicate that the stock may not be justified at its current price level. The high PEG ratio of 0.32 suggests potential growth, but the overall valuation metrics point towards a significant overvaluation in the current market environment.