What happened
AppLovin CEO Adam Foroughi said e-commerce advertisers 'aren't even at a ceiling of what they can spend,' but the platform can't yet reliably generate a high-quality 30-to-60-second video out of the box.
Why it matters
The stock sits at $305.06 near a 52-week low and trades near 13x forward EV/EBITDA, down from above 39x late last year, so the premium now rests on closing that creative gap.
What to watch
The Q3 report, expected in early November, hinges on whether reliable out-of-the-box video generation moves from pilot to general availability. Watch whether sequential revenue clears the 7% to 8% guided.
WHO IT HITSAppLovin's mid-market and long-tail e-commerce advertisers are most affected, since those without a TV-style video library face a choice between a one-click campaign and no campaign at all. Investors weighing the stock against The Trade Desk and Omnicom also carry the tooling risk.
Ask the AI about this article →
Summaries like this, in your inbox every morning.
AppLovin's story since its August miss has been told as a demand problem, but the Q2 call points elsewhere. Foroughi said e-commerce advertisers 'aren't even at a ceiling of what they can spend given the results that they're seeing' — the constraint sits on AppLovin's side of the table, in creative tooling. The ad unit pairs a long video with an interactive end card; the end card can already be auto-generated efficiently, but the high-quality 30-to-60-second video cannot yet be put 'in the hand of an advertiser out of the box.' For brands without a TV-style video library, that gap separates a one-click campaign from no campaign at all, which is why AppLovin is piloting with the e-commerce analytics firm Triple Whale to route mid-market brands onto the platform.
The tooling is already moving. A Jefferies survey of 30 e-commerce advertisers using AppLovin in the second quarter found its share of advertiser budgets rose about 169 basis points from Q4 2025, reaching 11.1% of spend, enough to rank among the top three ad networks by budget share and return on ad spend, just ahead of TikTok. Half of the respondents had tested AppLovin's AI-generated video, with several reporting better returns. Against that, the August quarter missed guidance because gaming, still the majority of revenue, saw a lighter-than-usual model improvement with the next step-up landing just after the quarter closed.
What the selloff repriced is the multiple: AppLovin now trades near 13x forward EV/EBITDA, down from above 39x late last year, and about 16x forward earnings, versus under 9x at The Trade Desk and under 7x at Omnicom. TIKR's mid-case values the stock around $640 by the end of 2030, assuming revenue compounds at roughly 19% — a deliberate step down from the 30% five-year historical rate. That case appears to hinge on generative video becoming reliable and mid-market adoption widening the funnel; if video stays unreliable and gaming breakthroughs stay slow, the mid-case may not clear.
For example, today's edition would include:
AI-summarized, only the topics you pick — one digest a day via Email, Slack, or Discord.
Free · 30 seconds with Google · unsubscribe anytimeWhat is AIToday? →
Ask AI anything about this article. Q&As are published on this page for other readers too.
OpenAI reportedly agreed to buy smartphone camera software startup Glass Imaging for more than $300 million, p…
Aron Inc. launched with $8 million raised across two rounds
At the AI ROI in Contact Center Summit, analysts Bob Laliberte and Zeus Kerravala said contact center AI ROI w…
Pedro Andrade, Talkdesk's VP of AI and generative AI business specialist, told theCUBE that CXA is "an operati…
Nvidia invested US$3.5 billion in MediaTek convertible bonds, expanding cooperation into custom AI chips, AI P…
TechTouch surveyed 319 people overseeing generative AI at firms with over 1,000 employees
