Using an unlevered Free Cash Flow to Firm (FCFF) model, we project AppLovin Corporation's cash flows over 5 years with line-by-line expense modeling. Revenue is projected revenue growing from 46.3% to 11.1% annually, with expenses (COGS, SG&A, R&D) held at historical ratios. Depreciation is computed from a vintage matrix based on a 5-year useful life. Working capital is modeled using historical turnover days (DSO 99, DPO 178, DIO 60). At a 9.3% WACC with mid-year discounting, the terminal value (85% of enterprise value) is derived by applying the industry peer median EV/EBITDA multiple of 24.0x to Year 6 EBITDA. After subtracting net debt, the equity value implies a fair price of $202.15 per share, suggesting APP is overvalued by 48.2% at the current price of $390.31.
Adjust parameters to explore scenarios. Changes are for exploration only and do not affect saved valuations.
| 2026 | 2027 | 2028 | 2029 | 2030 | Terminal | |
|---|---|---|---|---|---|---|
| Profit Before Tax | 1,767 | 2,277 | 2,852 | 2,693 | 2,992 | 3,067 |
| (−) Net Interest | 461 | 593 | 743 | 702 | 780 | 799 |
| (+) D&A | 8 | 10 | 13 | 17 | 20 | 20 |
| EBITDA | 2,236 | 2,881 | 3,608 | 3,412 | 3,792 | 3,887 |
| (−) Tax | 189 | 244 | 306 | 289 | 321 | — |
| (−) CapEx | 13 | 17 | 21 | 20 | 22 | — |
| (−) ΔWC | 329 | 404 | 455 | -126 | 237 | — |
| Free Cash Flow (FCF) | 1,704 | 2,216 | 2,826 | 3,229 | 3,212 | — |
| Peers' EBITDA Multiple | 24.0x | |||||
| Terminal Value | 93,206 | |||||
| WACC / Discount Rate | 9.27% | |||||
| Timing of FCF (mid year) | 0.5 | 1.5 | 2.5 | 3.5 | 4.5 | 5 |
| Present Value of FCF | 1,630 | 1,940 | 2,264 | 2,367 | 2,155 | 59,826 |
| Enterprise Value | 70,182 | |||||
| Projection Period | 10,356 | 14.8% | ||||
| Terminal Value | 59,826 | 85.2% | ||||
| (−) Current Net Debt | 1,058 | |||||
| Equity Value | 69,125 | |||||
| (÷) Outstanding Shares | 342M | |||||
| Fair Price | $202 | -48.2% | ||||
| WACC \ EV/EBITDA Exit Multiple | 20.0x | 22.0x | 24.0x | 26.0x | 28.0x |
|---|---|---|---|---|---|
| 7.3% | $189 | $205 | $221 | $237 | $253 |
| 8.3% | $181 | $196 | $211 | $226 | $242 |
| 9.3% | $173 | $188 | $202 | $217 | $231 |
| 10.3% | $166 | $180 | $194 | $208 | $222 |
| 11.3% | $159 | $172 | $186 | $199 | $212 |
Current price: $390.31. Green = undervalued, Red = overvalued.
Based on default parameters
This is an unlevered Free Cash Flow to Firm (FCFF) model with a 5-year projection period. Revenue, expenses, D&A, and working capital are projected using the same line-by-line approach as the Growth Exit models. The key difference is the terminal value methodology: instead of assuming perpetual cash flow growth, the terminal value is calculated by applying the industry peer median EV/EBITDA multiple to the projected Year 6 EBITDA.
Using a peer exit multiple anchors the terminal value to how the market currently prices comparable companies, rather than relying on a theoretical perpetual growth assumption. This approach captures relative valuation dynamics and is particularly useful when a company is expected to converge toward industry-average profitability over time. The sensitivity matrix shows how fair value changes across different WACC and EV/EBITDA multiple scenarios.