AppLovin Corp. (NASDAQ:APP)

Market (fair) value of AppLovin

The market value experienced significant fluctuations over the observed periods. Starting at approximately $20.1 billion at the end of 2021, it declined sharply by more than 58% to about $8.4 billion at the end of 2022. This was followed by a substantial recovery in 2023, reaching approximately $23.5 billion, and a remarkable surge in 2024 to nearly $112.8 billion, representing a nearly fivefold increase from the previous year.

Invested capital

Invested capital showed a decreasing trend from 2021 through 2023, dropping from about $5.6 billion to $4.5 billion. The decline over these years suggests a gradual reduction or optimization in capital employed. In 2024, invested capital stabilized, registering a slight increase to approximately $4.54 billion, indicating relative steadiness in capital levels after prior decreases.

Market value added (MVA)

Market value added, which reflects the difference between market value and invested capital, demonstrated a pattern closely aligned with market value trends. MVA was highest in 2021 at roughly $14.5 billion, then significantly decreased by nearly 78% to about $3.2 billion in 2022. This was followed by a strong rebound to approximately $19.0 billion in 2023 and a dramatic increase in 2024, reaching over $108.2 billion. The substantial rise in MVA in the last period highlights a markedly enhanced market perception of the company's value relative to its invested capital.

The financial data reveals significant fluctuations in the market value added (MVA) and related metrics over the four-year period examined.

Market Value Added (MVA)

The MVA experienced notable volatility, beginning at approximately $14.52 billion at the end of 2021, dropping sharply to around $3.18 billion by the end of 2022. This was followed by a substantial recovery to $19 billion in 2023 and a dramatic surge to over $108 billion in 2024. This pattern suggests a period of initial contraction or challenges, succeeded by rapid growth or enhanced market valuation in the later years.

Invested Capital

Invested capital showed a gradual declining trend from about $5.58 billion at the end of 2021 to approximately $4.51 billion by the end of 2023, with a slight increase to $4.54 billion in 2024. The overall decrease over the observed period might indicate asset divestment, operational efficiency improvements, or capital structure adjustments, with the minor uptick in the last year potentially reflecting reinvestment or expansion activities.

MVA Spread Ratio

The MVA spread ratio, which indicates the company's ability to generate value above its invested capital, displayed substantial variation. It started at a high of 260.37% in 2021, fell drastically to 60.64% in 2022, then surged to 420.9% in 2023 before reaching a striking 2384.14% in 2024. This remarkable increase in 2024 signals an exceptional ability to create market value relative to invested capital, suggesting improved profitability, innovation, market expectations, or other favorable business dynamics.

In summary, the data indicates that after a period of reduced market value addition and declining capital investment, there was a pronounced recovery and exponential growth in market value added and efficiency in value creation relative to invested capital in the last two years. This may reflect strategic shifts, enhanced operational performance, or market conditions favoring the company’s valuation.

The financial data of the company over the four-year period reveals significant fluctuations across key performance indicators. Notably, the market value added (MVA) and adjusted revenue exhibit notable trends that warrant detailed examination.

Market Value Added (MVA)

The MVA experienced a pronounced decline from approximately 14.5 billion USD in 2021 to about 3.2 billion USD in 2022, indicating a substantial reduction in shareholder value during this period. Following this decline, the MVA rebounded sharply in 2023, increasing to roughly 19 billion USD, which suggests a restoration of market confidence and company value. The most remarkable change occurs in 2024, where the MVA escalates dramatically to nearly 108.2 billion USD, representing an extraordinary growth and a significant increase in the company's market value.

Adjusted Revenue

Adjusted revenue shows a gradual upward trajectory throughout the period. Starting at approximately 2.8 billion USD in 2021 and 2022, revenues grow moderately to around 3.3 billion USD in 2023, followed by a more substantial increase to about 4.7 billion USD in 2024. This consistent revenue growth aligns with the rising market value and indicates improving operational performance and sales expansion.

MVA Margin

The MVA margin, which reflects the market value added relative to revenue, mirrors the volatility observed in the MVA figures. It sharply declines from an extraordinarily high level of 521.3% in 2021 to 113.54% in 2022, indicating a decreased efficiency of revenue conversion into MVA. The margin then recovers strongly to 576.21% in 2023 and further surges to an exceptional 2302.25% in 2024. This trend suggests a rapidly increasing ability of the company to generate market value far in excess of its revenue base, especially in the latest reporting period.

In summary, the examined financial indicators reflect a company undergoing significant value fluctuations but achieving remarkable recovery and growth, especially in 2023 and 2024. The steady increase in adjusted revenue supports the enhanced market valuation, while the MVA margin indicates an increasing efficiency in translating revenue into shareholder value. The extraordinary rise in market value and margin in 2024 points to potentially transformative developments affecting company valuation beyond mere revenue growth.