If this comment is not appropriate, please delete it. I just love wpr101’s videos. I am learning so much. I’ve been investing for 28 years, but never really learned how to dig into a company. I am learning about accelerating growth, using AI, the importance of a CFO in an earnings call, how to look for a weak performance from the CEO in an earnings call, industry tail winds, non lumpy financials, the important of it being a new business, and so much more.
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I echo this sentiment. It really is excellent content and stays true to the process of putting the company thoroughly through its paces when considering a stock.
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I completely agree. Speaking of parsing comments during the quarterly CCs, Adam Foroughi, AppLovin CEO said the following in his prepared remarks during the most recent CC:
“Recently, we took the first step towards opening up our platform broadly, quietly launching our new AXON ads manager, our self-service portal, which will serve as the foundation for our next decade of growth.”
Previously in the same commentary he stated that APP annual growth of 20% - 30% was all but certain.
A decade seems like a long time for a prediction of this sort. But, Adam is not one for hyperbole. What do you make of this remark?
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I have been following app for 2 years, and I have found management to be almost laughably understated. I think the growth rate estimates are at least 50% too low.
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Agreed. But a ten year forecast - That gives me pause.
I once worked for Meta. Though I was not in the direct team, but my understanding is that self-serving Ads Manager is indeed a necessary tool to drive long term ads revenue growth. Meta has several teams of engineers working on that tool, for years. The fact that AppLovin’s ads manager is only in beta mode now does reveal the significant opportunities ahead of them.
That being said. I think the biggest disadvantage of AppLovin, compared to Meta, is that AppLovin does not technically own the ads inventory while Meta does. Ads inventory is basically where the impressions of ads happen in the mobile apps. While Meta can display ads in their family of apps (Facebook, Instagram, etc), AppLovin offers an SDK to APP (mostly game) developers. The developers can decide which SDK to integrate with for their monetization and the switching cost is not too much. This means that, if there’s another SDK (e.g. Unity’s Vector or Google’s Admob, etc) that can have higher CPM than AppLovin Max, the developers will switch. AppLovin does have 1st party APPs as well (the gaming studio they just sold), but it has to be competitive outside as well in order to succeed. At this moment, I think AppLovin does have superior CPM in gaming APPs. But I’d keep a close eye on any potential competitors in this field, especially Unity who also have huge amount of user data in gaming. Other than this inventory risk, I don’t have doubt that significant long term growth can still be achieved via Ads Manager as well as model improvements.
Cheers,
Luffy
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@monkeydluffy Interesting commentary. Adam was asked about the comment made by the Unity CEO that they had “gaming engine data” and if he thought it might pose a competitive threat. Adam replied that he didn’t even know what gaming engine data was and seemed very skeptical that it might be some “magical” (Adam’s word) data. In other words, he blew it off.
APP has been my best investment since that SaaS heyday. I tend to take Adam very seriously. He seems to be a very straightforward no BS kind of guy. When it comes to advertising for mobile games, MAX has a virtual monopoly as the instantaneous bidding system. Whether or not that will carry over to other verticals remains to be seen, but for eCommerce I would venture that Google and Meta pretty much own the territory. However, ads placed by AXON are likely to be executed via MAX (I assume).
Google and Meta have both been around for more than 10 years, so I guess Adam’s decade guide isn’t at all unachievable, nevertheless, it’s a pretty bold statement.
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Thank you all for the amazing feedback! This board really is my target audience for the videos. I am glad to hear the content is providing as much value as I had hoped.
One of my big take aways from Saul’s Knowledge Base was the importance of documenting and defining our strategy. Additionally the monthly summaries help with discipline and explaining our investment decisions. My thought was to create my own study guide in a sense, a complete documentation of my process and steps to follow for getting superior results.
It is worth reiterating too, this is not a zero sum game. This means we do not need to take from someone else to do well. The success of our companies depends on how much value they can create for the marketplace. As Saul pointed out, there is no cap to how high a stock can go.
@brittlerock I believe Adam is envisioning a complete take over of the digital advertising market in the longer term. It sounds like the steps will be put in motion for this starting this process in Q4 and why he is referring to it as a “fun quarter”. He has mentioned the new advertising platform will have zero churn. What that seems to indicate is that the new platform is vastly better than other solutions in the market. He has talked about a ROAS tipping point before, where the advertisers want to spend on as much supply as possible. From my point of view, APP has one of the strongest narratives I have seen before.
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@wpr101 My kudos for your publications videos and board commentary as sincere. It’s obvious that many of us are gaining knowledge and insight from the information you generously share.
As I was thinking about it, it occurred to me that investing can be something like the inverse of a zero sum game - whatever that may be called. It is true that ultimately the companies we choose to invest in are the drivers or our income. But in the end we profit from the upward motion of the stock price. It therefore stands to reason that everyone who buys stock in a company benefits every other stockholder by virtue of the fact that they take a limited supply of stock off the market, thereby driving the price up as demand exceeds supply. This, of course, assumes that the company is not continually putting out more shares and diluting the pool. With APP, anyone who has paid attention knows that they regularly retire more stock than they issue.
Also, thanks for your reply to my question. I had not actually perceived that Adam’s goal for the company was to thoroughly dominate the digital ad space, a very large space indeed. I had simply thought that the goal was to be another heavy hitter in a shared space along with Meta and Alphabet and possibly one or two others. The TAM can obviously support a few winners. If you’re correct and AppLovin actually succeeds the shares we purchase now represent an extraordinary value.
Eventually, Applovin will be forced to pay dividends to the shareholders so we won’t have to sell our shares to realize the gains they have provided. What else can they do with all the earnings they generate?
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@brittlerock It makes sense to define our investment style by what it is, rather than what it is not as you mentioned. The correct term for this seems to be a “Positive Sum Game”. In a positive sum game collaboration brings benefits to all, “the pie can grow, everyone can receive more, and real value is created”. I’ll link to a response from AI below showing the difference between a zero-sum and positive sum game.
The thread on HIT is a good example of collaboration in work. @drew1618t found a concerning thread in the S1 regarding some loans, and you followed up to see if we can get an answer from investor relations. This issue would have been a blind spot for me, or a potential risk I was unaware of, but now I have knowledge of that issue.
I’m also thinking of the example of myself joining Saul’s board in 2020. I was able to ramp up on Saul’s Knowledge Base and see where I had some weaknesses in my game. At first I was wondering, what’s the catch, this person is just giving away all their top ideas and entire playbook? After some point, I was able to learn what makes a Saul stock, and then become self sufficient to introduce new ideas to the board.
In a similar ways, the strategy videos are helping myself to level up. I have to refine the content and think about a straightforward way to explain a concept. Sometimes I’ll get a basic question which can reveal I did not explain some part well or there was something I was doing from intuition but did not realize it. Sometimes the questions or suggestions are leading to a tweak in my own process.
Regarding AppLovin and what else they can do with the earnings, I think one avenue may be entering social media in some way. I was quite surprised that AppLovin had any interest to buy TikTok. It is possible they have some skunkworks social media projects under way and they may be looking into an avenue there with the TikTok deal cancelled.
Thinking how the 10 year timeline of growth could take place, it may look something like this. Keeping in mind this is an outlier outcome on the positive side,
Q4 2025: kickoff new platform
2027: scaled up to the size of Meta or Google
2029: take over scenario starts taking hold
2030+: social media
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Hello, this will be my first post on Saul’s board. Please don’t hesitate to let me know if I’ve violated any rules. WPR101 posted a link to this board on one of his Growth Investment Mastery videos. I, too, am most impressed with Wpr’s work, and am very grateful for it. With regard to APP, I’ve found a Substack piece by Sunrise Capital titled: “AppLovin Deep Dive: an exponentially growing Ad Platform” to be invaluable in understanding what APP does and why it has been so successful. I highly recommend it and hope it isn’t a violation of the rules to post the link: https://tinyurl.com/3byp6p96.
The Substack article also makes reference to Eric Seufert, a leading expert in ad-tech. Seufert has a podcast titled Mobile Dev Memo Podcast. Episode 11 of Season 4 is titled “Understanding AppLovin” which is 39 minutes long.
The Sunrise Capital Substack is rather long (but compelling) and covers a lot of ground. It explains, for example, that by purchasing TikTok, AppLovin would attain “Walled Garden” status similar to Google and Facebook since they would “own” first party content (posts by TikTok users) that advertisers want access to. The article suggests that Pinterest and Snap are other avenues to acquire first party content if APP isn’t able to buy TikTok.
A few quotes from SubStack: “AppLovin’s business is an integrated ecosystem designed to connect advertisers to users with maximum efficiency.” “Advertisers set return goals for their campaigns, and AppDiscovery will match those goals. More importantly, advertisers are charged based on the revenue they received from acquired users, rather than a simple CPM or action (click or installation) measurement. This aligns incentives of AppLovin with advertisers and shows that revenue growth of AppLovin is driven by enhanced performance of its customers. This is where the cycle becomes self-reinforcing. The surge in advertising demand means more ads are going on, which leads to higher revenue for publishers. This success attracts even more publishers to the platform, further expanding the inventory and, crucially, feeding the system with more data supply. This entire virtuous cycle, where every outcome immediately informs and improves the next action, creates a powerful closed-loop effect, causing the flywheel to continue spinning faster and strengthening APP’s competitive moat with every rotation.”
The Substack calls Axon 2.0 the “secret sauce.” Here is a quote from the Substack: “Axon 2.0 is a “black box” advertising system. This means that advertisers provide high-level inputs—their budget, their creative assets (videos/images), and their specific business goal—and the AI handles everything else. Advertisers do not manually choose where or when their ads are shown; they delegate all tactical decision-making to the AI. This is akin to Meta’s Advantage+ and Google’s PMAX+. Similarly, AXON 2.0 operates on a goal-based bidding. Instead of maximizing price per ad (i.e. getting the cheapest ads), black-box advertising ensures that the goal set by an advertiser for a campaign is met.”
I don’t pretend to fully understand all of the Substack piece, but it together with Wpr101’s analysis, has me convinced that AppLovin is a compelling opportunity that very likely has quite a bit of running room ahead.
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I echo appreciation for @wpr101. I will also piggyback off of @brittlerock’s comments and say that one reason I think this board is phenomenal is our hivemind. We introduce new exceptional companies to the board and many of us take positions. There is then additional attention generated as we all tweet, word-of-mouth, blog, etc. This causes an exponential effect (where if each person who learns about the stock tells two others and each of those tell two others, you very quickly get a critical mass of awareness and increase buyers which only serves to benefit current shareholders).
I also have benefited greatly from Saul and others freely sharing knowledge here, and it has made a huge impact on my finances. I want to ensure this board stays alive and continues to help diligent, hard-working folks find financial freedom. Thanks to this community for all you do! 
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@wpr101 BTW, I have a call scheduled with HIT IR on Monday afternoon about the loans that @drew1618t brought to our attention. I will post what I learn from the call. I got a prompt reply to my inquiry. I was expecting a written reply, but the IR rep suggested a video call would be better.
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That right there is a great way to maintain investing discipline. It becomes a checklist which must be fulfilled before putting money on the table or taking it off.
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TMF recommendations are behind a paywall. Out of respect to TMF and Saul’s rules of the board we should not be dicussing TMF’s recommendation status for any company.
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