AppLovin Stock Plunges After Short Seller Reports

AppLovin Corporation (APP) shares took a nosedive on Wednesday, February 26, following the release of critical reports from two short-selling firms, Fuzzy Panda and Culper Research. The reports alleged various fraudulent and deceptive practices that could potentially lead to AppLovin's services being blocked by Apple, Meta Platforms, and Google. This marked AppLovin's seventh consecutive losing session, with shares plummeting as much as 22% during the day.



Fuzzy Panda's report accused AppLovin of stealing data from Meta Platforms (META) and violating app store policies of Apple and Google. The short seller claimed that AppLovin's e-commerce advertising business uses data from customers advertising on Meta's platforms to "reverse engineer" Meta's ad data, making its ads appear more effective than they would be on their own. Fuzzy Panda also alleged that AppLovin's software can track users without their consent, including children.

Culper Research, on the other hand, called AppLovin's AI-powered advertising search engine, AXON 2.0, a "smokescreen" to distract from its real growth drivers. The short seller claimed that AppLovin's success has been driven not by AI, but by the systematic integration and exploitation of notoriously dangerous app permissions that silently trigger backdoor app installations. Culper Research also suggested that AppLovin's ads can download other mobile games without a user's consent, making its ads appear more effective and generating more per-install revenue.



AppLovin's stock has been on a rollercoaster ride in recent weeks, with the company reporting strong quarterly results last week that showed revenue growth of 44% on a year-over-year basis. The stock popped 20% on the report as the company highlighted the strength of its AI advertising model. However, the recent short seller reports have cast a shadow of doubt on the company's business practices and growth prospects.

In conclusion, the allegations made by Fuzzy Panda and Culper Research have sent AppLovin's stock into a tailspin, with shares down more than 16% on Wednesday. The company's ability to address these allegations and maintain the trust of its partners, customers, and investors will be crucial in determining its future success. As the situation unfolds, investors should closely monitor the developments and assess the potential regulatory and legal consequences for AppLovin if the allegations are proven true.