Cramer Flags 84% AppLovin Margin, Citing Trade Desk’s 56% Stock Drop
Cramer warns that AppLovin’s 84% Q4 adjusted EBITDA margin and free cash flow of $1.309B up 88% YoY could attract Alphabet’s entry into ad tech. He cites The Trade Desk’s 56% stock decline in the past year despite $2.896B full-year 2025 revenue and 95% customer retention as a cautionary precedent.
1. Cramer’s Warning for AppLovin Investors
Jim Cramer cautioned that AppLovin’s exceptionally high margins could prompt Alphabet to enter the ad tech market aggressively, using its scale to undercut smaller platforms. He highlighted the 84% Q4 adjusted EBITDA margin as a potential beacon for a competitive takeover.
2. AppLovin’s Margin and Cash Flow
In Q4, AppLovin posted an 84% adjusted EBITDA margin, up from 77% a year earlier, and generated $1.309B in free cash flow, a rise of 88% year-over-year. For full-year 2025, the company delivered $3.952B in free cash flow, underscoring its strong profitability.
3. Trade Desk’s Stock Decline Precedent
The Trade Desk grew 2025 revenue to $2.896B and maintained customer retention above 95% for 12 years, yet its stock plunged 56% over the past year. Cramer pointed to this drop as evidence that stellar ad tech performance can still face severe repricing risks.
4. Competitive Risks Highlighted in Filings
AppLovin’s SEC filings warn of a ‘competitive advertising ecosystem’ and the ‘inability to adapt to emerging technologies and business models.’ These disclosures mirror Cramer’s view that high margins can invite powerful new entrants into the market.