Invest with Henry on $APP (Nov 1, 2026)

Applavin is a new stock that I haven't discussed on this channel before, but I researched it and wanted to introduce it to you because the stock is down about 65% from its high, while earnings grew 53% last quarter.

I think this is a good time to talk about this stock, because the first time I discuss a stock, I do n't want to talk about it at its highest price. But after seeing the value and security created by a 65% price drop, I tell my investing community, "This stock is pretty good."

When I look at the company, I see that their future goals or guidance are also quite good. That is, they are in growth and their guidance is also very strong. So, even though the business continues to grow, the share price is getting cheaper.

This is exactly the kind of situation I like to see.

So, I see a bit of that in AppLovin , because the stock has come down a lot and even if it's not the lowest it's ever been , it's still a very good price to buy the stock.

So, this is its business model. Apps have empty advertising space. Applavin selects the ads and shows them to the customers who are most likely to pay, and advertisers pay Applavin for that basic service.

The more they become skilled at it , which is basically what Meta is doing, and why I talk so much about Meta on this channel, is because advertising is like a money-printing machine.

So, the more budget advertisers provide, the more efficient Applavin becomes. So, it's basically a cycle where they get more data and improve their algorithms.

And since they are basically using machine learning , I am now talking about Applavine. Since they use machine learning , the more the model is used, the better it gets. So, the more budget, the better model.

Better models, more budget. Think of it like a flywheel effect and it's a big reason for the growth we're seeing.

Now, let's talk about the numbers. Over the past 12 months, revenue was approximately $6.8 billion and free cash flow was approximately $4.5 billion. Last quarter, operating margins were around 78%, which is incredibly profitable for the business.

There is a thing called the Rule of 40. It simply adds up a company's growth rate and its free cash flow margin, and anything over 40 is considered very strong. Applavin is well over 100 and I'm not kidding here. This is extremely rare.

So, when I look at the stock, I see it's down 65%. In my opinion, this is a really great opportunity. Of course, it's not perfect. There is slightly more cash than debt , about 3 billion against about 3.5 billion in debt.

And anything related to advertising is not recession-proof, because advertisers also retreat during recessions.

Last quarter, Applavin narrowly missed its own revenue target, and the stock fell nearly 20% in a single day. So, it is extremely unstable and at the same time very interesting.

So, where there is a lot of risk, there is also a lot of opportunity. So, I would n't invest too much in this position, and of course I'm not a financial advisor, so I'd like you to do your own research, especially when it comes to small-cap companies.

I can't really say the same when looking at Appalavien. There are many opportunities here, but it's not a sure bet , as it was for me with AMD earlier this year.

There are also shareholder lawsuits and short sellers coming after the company. So , I'm not hiding any of this. You should be aware that this is one of the riskiest stocks on my list of 11 stocks.

Still, in my opinion it's a high-quality business and the stock is down 65%. So, this is a real fact. Yes, it's down for a real reason and could go lower, but I'm pretty optimistic here, given how much of a discount the stock is getting right now and how much revenue and cash flow they have.