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Shares of AppLovin sank 20% on Thursday, their steepest drop on document, as one other short-selling agency raised issues in regards to the firm’s digital advert know-how and claimed that it is violating app retailer guidelines.
AppLovin tumbled $65.92 to shut at $261.70. The inventory soared greater than 700% final 12 months, the largest acquire amongst U.S. tech corporations, resulting from enthusiasm surrounding AppLovin’s synthetic intelligence know-how and the expansion it was spurring in its advert enterprise.
However Muddy Waters Analysis on Thursday turned the third short-selling agency to publish a report meant to lift vital investor skepticism. The inventory is down 19% in 2025 after Thursday’s drop.
The report mentioned that AppLovin’s advert ways “systematically” violate app shops’ phrases of service by “impermissibly extracting proprietary IDs from Meta, Snap, TikTok, Reddit, Google, and others.” In so doing, AppLovin is funneling focused advertisements to customers with out their consent, Muddy Waters mentioned.
“If APP shouldn’t be deplatformed, logically, quite a few opponents will begin copying APP’s strategies as a result of there’s little know-how concerned,” the agency wrote.
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Final month, Fuzzy Panda Analysis was one in every of two corporations, together with short-seller Culper Analysis, that critiqued AppLovin’s AXON software program, which drove its earnings progress and inventory surge. The shares dropped 12% on Feb. 26, the day of the quick reviews. Earlier in February, AppLovin reported a income and earnings beat.
After the quick reviews had been revealed final month, AppLovin CEO Adam Foroughi wrote a weblog put up, defending his firm’s know-how and practices, and taking goal on the quick sellers attempting to revenue from AppLovin’s decline.
An AppLovin spokesperson did not present a touch upon Thursday, referring CNBC to Foroughi’s put up.
“It is disappointing that a couple of nefarious short-sellers are making false and deceptive claims aimed toward undermining our success, and driving down our inventory value for their very own monetary acquire, fairly than acknowledging the delicate AI fashions our crew has constructed to boost promoting for our companions,” Foroughi wrote. “It is also noteworthy that the quick reviews emerged after our earnings report, the place we might be in a interval of being unable to reply with monetary efficiency.”
Earlier this month, Fuzzy Panda penned a letter to the S&P 500 inclusion committee reiterating its claims of fraudulent advert ways and alleging that AppLovin did not meet the committee’s “gold customary.” The agency inspired the committee to maintain AppLovin out of the S&P 500.
“AppLovin’s latest income progress has been based mostly in knowledge theft, income fraud, and the exploitation of our nation’s legal guidelines defending youngsters,” the agency wrote to the S&P committee.
Considered one of Muddy Waters’ central claims is that e-commerce advertisers are bailing on AppLovin. The agency mentioned that it analyzed 776 advertisers energetic early within the first quarter and famous that the churn price was about 23%, whereas Foroughi “reportedly claims there was no churn,” in response to the report.
Muddy Waters mentioned it carried out the churn evaluation by taking a look at e-commerce web sites that, on Jan. 3, had AppLovin’s AXON pixel. The agency then re-ran these checks from March 24-26, and mentioned it discovered 21 websites with “damaged hyperlinks,” and one other 171 that not contained the pixel.
The 23% “churn price relies solely on these clients who eliminated the pixel,” the agency wrote.
A consultant for Muddy Waters declined to remark.
WATCH: AppLovin shares down after Muddy Waters quick
