Recent market concerns that Alphabet’s Project Genie will undercut AppLovin’s core ad-tech business are exaggerated. Project Genie remains a prototype virtual world generator with limited integration into mainstream mobile gaming platforms. Its current feature set focuses on early-stage content creation tools rather than fully operational advertising ecosystems. As a result, any displacement of AppLovin’s ad network, which serves over 5,000 mobile game publishers and delivers more than 50 billion ad impressions per quarter, is unlikely in the near term.

Despite persistent short interest of approximately 12% of float and elevated intraday volatility averaging 4.2% over the past month, our conviction in AppLovin remains high. We anticipate the company to report top-line growth in the range of 68% to 70% for calendar year 2025, driven by continued adoption of its Axon AI engine across direct-to-consumer and e-commerce verticals. Management’s guidance for Q4 highlights sequential improvements in daily active advertiser count and a return on ad spend exceeding 4.5x for key retail clients during the holiday period.

AppLovin’s transition to a pure-play ad-tech model has unlocked industry-leading operating leverage. For CY25, we forecast adjusted EBITDA margins of 83% to 84%, up from 76% in the prior year, as fixed platform costs are spread over a rapidly expanding revenue base. The divestiture of its mobile game development arm, which generated less than 8% of consolidated revenue in 2024, further enhances free cash flow conversion, expected to exceed 45% of EBITDA in CY25.