Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Nearly 30 years of experience in the Korean/Asian equity research. Major sectors coverage include the following:
- Technology 
- Consumer 
- Special Situations/Deep Value Plays
- Tender Offers/M&As
- Holdcos/Stubs
- Asian Unicorns/Private Companies

Korea/Asia, Events, IPOs

AppLovin IPO – Not Lovin This Whirlpool of a Rollup

Roblox Direct Public Listing Valuation Update

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Equity Capital Markets

<div class="content-highlight"><p>AppLovin announced its IPO price range of $75 to $85 per share. The company is selling 25 million shares and at the high end of the IPO price range, the company is aiming to raise $2.1 billion. At the high end of the IPO price range ($85 per share), AppLovin would be valued at $30.4 billion. </p></div><p>Our base case valuation of AppLovin is EV of $35.1 billion, implied market cap of $35.7 billion, and implied target price per share of $99.8. This represents 17% higher than the high end of the IPO price range of $85. We have a POSITIVE view of the AppLovin IPO. Our base case valuation of AppLovin is based on a 16x EV/S multiple (using 2021 sales estimate), which represents a 10% higher than the average EV/S multiple of the comps. It is also below the EV/S multiple of Unity Software and Roblox which trade at EV/S multiple of 26.8x and 19.2x, respectively. </p><p>We estimate AppLovin to generate sales of $2.2 billion (up 51% YoY) and an operating profit of $65.2 million in 2021. From 2020 to 2025, we have assumed the company's sales to grow at a CAGR of 28.6%.</p>

AppLovin announced its IPO price range of $75 to $85 per share. The company is selling 25 million shares and at the high end of the IPO price range, the company is aiming to raise $2.1 billion. At the high end of the IPO price range ($85 per share), AppLovin would be valued at $30.4 billion. Our base case valuation of AppLovin is EV of $35.1 billion, implied market cap of $35.7 billion, and implied target price per share of $99.8. This represents 17% higher than the high end of the IPO price range of $85. We have a POSITIVE view of the AppLovin IPO. Our base case valuation of AppLovin is based on a 16x EV/S multiple (using 2021 sales estimate), which represents a 10% higher than the average EV/S multiple of the comps. It is also below the EV/S multiple of Unity Software and Roblox which trade at EV/S multiple of 26.8x and 19.2x, respectively. We estimate AppLovin to generate sales of $2.2 billion (up 51% YoY) and an operating profit of $65.2 million in 2021. From 2020 to 2025, we have assumed the company's sales to grow at a CAGR of 28.6%.

AppLovin

AppLovin IPO Valuation Analysis