AppLovin Corp. (NASDAQ:APP)

The Price to Operating Profit (P/OP) ratio exhibits significant fluctuation over the observed period. Initially, the ratio was very high, decreasing substantially before stabilizing and then increasing dramatically in later years. This movement correlates with changes in both share price and operating profit per share.

P/OP Ratio Trend

In March 2022, the P/OP ratio stood at 111.61. The ratio was not calculated for February 2023, likely due to negative operating profit per share. By February 2024, the ratio had decreased to 31.12, indicating a more reasonable valuation relative to operating profit. A substantial increase is then observed, with the ratio reaching 58.16 in February 2025 and 33.47 in February 2026.

Share Price Influence

The share price demonstrates a volatile pattern. It decreased from US$44.55 in March 2022 to US$13.50 in February 2023, before rising sharply to US$58.99 in February 2024. Further increases are seen in subsequent years, reaching US$320.49 in February 2025 and US$412.00 in February 2026. This upward trend in share price contributes significantly to the observed changes in the P/OP ratio.

Operating Profit per Share Influence

Operating profit per share was US$0.40 in March 2022, declining to a negative value of -US$0.13 in February 2023. A positive trend emerges thereafter, with operating profit per share increasing to US$1.90 in February 2024, US$5.51 in February 2025, and US$12.31 in February 2026. The growth in operating profit per share, particularly in the later periods, moderates the impact of the rising share price on the P/OP ratio, but does not prevent overall increases.

The combination of share price appreciation and improving operating profit per share results in a fluctuating P/OP ratio. The substantial increase in the ratio in the later years suggests that the market valuation is growing at a faster rate than operating profitability, potentially indicating increased investor optimism or speculative behavior.