🧠 Takeaways:
AppLovin is giving Facebook 2016 vibes, but they need to upgrade their playbook to operate like a real Ad player.
Solve the video ad problem w/ AI-generated game-like creatives (43% onboarding breakage -> sub-5%)
Build a DC office like the big boys to move beyond these investigations.
Own the mobile gaming ad monopoly. Leverage the eCom wins to dominate advertising to 25-45 yr old women.
+ This Block layoff thing is so silly.
LBAB Community: Block Didn’t fire 40% of their staff because of “AI”
Quick Context for everyone who didn't spend all day on LinkedIn/financial news since Friday.
Block $33B (owners of Square, CashApp, Afterpay) had a RIF from 10k -> 6k
Their reason: “AI restructuring”
The market FREAKED OUT. Their stock popped as much as 25%.
It’s inspired these silly panic-thought pieces talking about what a 40% job cut would do to the EnTiRe S&P 500.
I wonder where they got 40% from?
But let's get real. AI didn’t magically cause Block to fire 40% of their staff.
Stock’s -72% L5 + has gone nowhere since 2022
Stagnating growth
Pushed them to M&A redundancy layoffs
Block is essentially a massive hold co:
The only 2 bizs that matter (Square + Cash App) were run as 2 separate orgs.
Afterpay added another ~1.3k employees to the mix, which was a "terrible business decision" (what the judge overseeing a shareholders lawsuit against Block said about the acquisition).
AI helped them consolidate their tech stack/functions/work load. But let’s not get this twisted.
This is classic M&A driving backend efficiencies, with a CEO who needed a PR hit, so someone would care about their portfolio of anti-synergies that isn’t working.
Did AI account for some of the layoffs? Of course.
I’m sure they wiped our Jr. employees + relay people. But that’s not 40% of the biz. My money’s on <10%.
When you migrate from 2-3 codebases / org structures to 1, you don’t need HRs, DevOps, and Product Marketers from Org X or Org Y.
Next, when Paramount lays off 30-50% of WBD’s bloated org because you don’t need 2 accounts and 2 law firms, then AI is responsible for those layoffs too.
This narrative is played out.
Let’s Examine This Biz
Note: As always, none of what follows is legal, tax, investing, financial, or any other sort of advice. And I was never here.
AppLovin (the Meta of mobile gaming ads) is -47% from its ATH.
An SEC probe, short seller attacks, and AI disruption fears have crushed the stock (while the biz prints $4B in FCF).
Stock price: $404
Market Cap: $137B
L5 Performance: -47% from ATH
P/E Ratio: ~40x
Today, we're buying the dip to scale this biz into a $1T mobile gaming ad monopoly.
Financial Summary
Rev: $5.5B (+70%) 😍
Gross Profits: $4.8B (+78%) 💪
OPEX: $663m (-16%) 😍
Net Income: $3.3B (+111%) 🤤
FCF: $3.95B (+91%) 🤤😍
TLDR Analysis: An Absolute Cash Machine
Rev +70% YoY at $5.5B scale. 😍
OPEX went DOWN YoY!!! 🤯
EBITDA 82% EBITDA margins. 🤤🤤
$4B in FCF. Rule of 40 score: 150. 🤯😍🤤
At this rate of scale, with this much growth, with this level of profits, we aren’t sure how big this biz will be.
Let’s TLDR This Biz
Founded:
2012 by Adam Foroughi, John Krystynak, and Andrew Karam.
Started as a mobile app distribution platform. Pivoted to ad tech.
Aha Moment:
2018-2020: Acquired MAX (mediation), Adjust (measurement), and MoPub (auction).
Realized owning the full ad stack: auction + targeting + measurement is the only defensible position in ad tech.
Growth:
Built AXON 2, a proprietary AI model that runs 11B+ daily ad auctions.
Network effects: more publishers -> more data -> better targeting -> more advertisers -> more publishers.
Freemium-style PLG for gaming studios. Help indie devs grow, capture them forever.
Model:
Own the mediation layer (MAX) where publishers monetize inventory.
Own the demand side (AXON) where advertisers bid on users.
Take 5% fee on outside winning bids + run own campaigns at massive scale.
Divested gaming apps in June 2025 for $900M. Now pure-play ad platform.
The Crash:
ATH of $745 (Dec 2025), crashed to $404 (-47%) on SEC probe (Oct 2025), short seller attack (Jan 2026, later retracted w/ apology), and broader AI fears.
Despite continuing to print the best numbers in ad tech. Stock is plummeting.
Let’s Fix This Biz
Here are our 3 moves to turn AppLovin into a $1T mobile gaming ad monopoly.
1) Solve the Video Ad Problem w/ AI-Generated Game-Like Creatives
HALF of brands don’t complete onboarding because they don’t have the right video assets.
43% of qualified ecom advertisers churn during onboarding because they don't have the right video ads.
They show up w/ 5–7 second TikTok/Instagram clips. Gaming inventory needs 35s immersive video (5x longer than social).
AppLovin has 10+ yrs of data on what mobile game ad creatives convert. They invented the playable ad format.
We’re spinning up a $500m budget to build + buy our way into auto-generated game-like video ads. Any DTC brand can upload product images, AXON generates the creative, tests variants, optimizes automatically. No creative team needed.
Quick Math:
Assume Applovin has ~1k qualified leads/quarter. 570 go live (57%). 430 don’t fully activate (43%).
If they can get that churn to <5%: 950 go live. That's 380 additional advertisers/quarter = 1,520/yr.
Avg spend: $30K/week = ~$1.5M annually per advertiser.
Year 1: 1,520 new advertisers x $1.5M = $570M incremental revenue.
Assuming:
Existing advertisers increase spend 50%+ week over week as AXON models improve.
3-year estimate: 3,000–5,000 additional active ecom advertisers.
Revenue unlock: $2-4B incremental at 88% gross margin.
Net income impact: $1.2–2.4B incremental.
At 40x earnings = $48–$96B in market cap creation.
Takeaway: Do everything to reduce onboarding friction.
2) Lobbying Like the Big Boys
AppLovin is a $137B biz w/ a $0 government affairs budget vs...
What the Big Boys Spend:
Meta: $26M lobbying in 2025. 85 lobbyists = 1 for every 6 members of Congress.
Alphabet: $15M/yr. ~40 lobbyists.
ByteDance: $10.4M in 2024. 55 lobbyists.
Amazon: $17.6M/yr. ~60 lobbyists.
Even Snap: ~$2M/yr w/ ~15 lobbyists.
AppLovin: ~$0. Zero lobbyists. Zero DC presence.
Since the SEC probe was announced in Oct 2025, the stock dropped 14% in one day.
$32B in market cap destroyed.
Why Lobbying:
Meta paid a $5B FTC fine and moved on. Stock recovered in months.
Google paid $170M for COPPA violations. Stock didn't blink.
ByteDance spent $10.4M lobbying and got a TikTok ban paused.
AppLovin is running the exact same data collection practices as every other ad platform. This isn’t anything new. They’re not playing the game like everyone else.
It’s time to match Meta's playbook and spend $25-30M/yr in lobbying + government affairs to
Hire 3-5 former FTC/SEC officials.
Build a DC office.
Pay the fine / Settle the SEC probe < 6 mos.
$500M-$1B fine on $4B annual FCF = 2-3 months of cash flow vs. $32B in market cap.
This is a simple investment.
Takeaway: At different scales, your biz needs to act like larger entities.
3) Own the Mobile Gaming Ad Monopoly
Applovin owns the mobile ad industry. Who plays a ton of video games? The most valuable advertising demo: 24-45 yr old women.
There’s a big sell off over fears they can’t compete with Meta.
The Audience Everyone Misunderstands:
Mobile gaming: 53% female. Avg age 36.
3 billion mobile gamers worldwide.
444 billion hours of attention annually.
74% of gamer moms play daily.
Higher income/education = more likely to play.
Women control $32T in global spending, influence 85% of all purchases, and will hold 75% of discretionary spending by 2029.
eCom/CPG is the first beach head.
After dominating their first market + using it as a case study, it’s time to expand into the other major markets that spend a lot on women:
Financial Services: ~$37B (Women control 76% of household wealth)
Auto: ~$14B (Women buy 65% of new cars. Avg mobile gamer)
Healthcare/Wellness: ~$12B. (Women make 80% of healthcare decisions)
Entertainment: ~$10B+
The beauty of the model is that they don’t need to do anything new here. They need to build out the advertising ecosystem for every major market.
Takeaway: Crush it for your first market so much it attracts the next most valuable segments.
Final Thought
AppLovin reminds me A LOT of Meta 2016 (I invested back then when we were all plowing money in DPAs and Instagram ads).
Everyone was questioning Facebook's data policies/ Privacy scandals (Cambridge Analytica). Nobody thought mobile News Feed inventory was valuable, Instagram was overvalued.
Meta’s 2016 market cap = $331B.
10 years later = $1.66T (+405%).
AppLovin is in a similar spot.
SEC probe? Meta had Cambridge Analytica. "Mobile gaming ads aren't real inventory"? Sounds like Mobile ads.
Everyone’s talking about Mobile game ads as if it’s a niche industry. Seems like history is rhyming.
Meta went from 2016: $28B Rev -> $160B+ today by owning social.
AppLovin is at $5.5B owning mobile gaming which is just taking off.
Now we have to see where they go from here.
