Greenhaven Road Investment Management, LP on AppLovin Corporation
Thesis
Greenhaven initiated a roughly 1% position in AppLovin as part of a small basket of AI beneficiaries. The fund views AppLovin as one of the strongest examples of AI being deployed at scale to directly improve advertising outcomes and monetization. Revenue grew roughly 70% in 2025 while adjusted EBITDA margins approached 82%, producing exceptional free-cash-flow conversion and productivity. Despite these metrics, the shares were available at less than 20 times the fund's estimate of 2027 free cash flow. Continued growth would make the current valuation attractive even without further multiple expansion.
“AppLovin has been one of the best companies at using AI at scale to drive revenues and profits.”
Key risks
- Exceptional recent growth and margins may not be sustainable
- The valuation relies on substantial future free cash flow
- Competition in AI-driven mobile advertising could intensify