AppLovin's Valuation Rides on Dubious Business Practices Amid Short-Seller Reports

AppLovin's stock has soared over 700% in 2024, but recent short-seller reports have raised concerns about the mobile ad tech operator's business practices, including ad fraud, links to Chinese entities, and violations of platform partners' rules. The company's valuation hinges on its ability to graduate to direct-to-consumer sales, competing with tech giants Meta and Google. Industry standard in mobile ad tech is considered ugly, with intrusive ad formats and questionable performance metrics.

AppLovin Corp (NASDAQ: APP) has been the subject of significant market volatility in recent weeks, with its stock experiencing a sharp intraday decline of 5.54% to $345.90 on July 17, 2025, breaking below its 200-day moving average of $309.32 [2]. The selloff comes amidst a backdrop of regulatory scrutiny, insider selling, and divergent analyst ratings, all of which have fueled investor concerns ahead of the company's second-quarter 2025 earnings report scheduled for August 6 [1].

The recent decline in AppLovin's stock can be attributed to several key factors. First, the company's exclusion from the S&P 500 index, which was anticipated but ultimately did not materialize, has been a source of disappointment for investors [3]. Additionally, a critical report published by a short-seller raised concerns about the company's business practices, including allegations of ad fraud, links to Chinese entities, and violations of platform partners' rules [3]. These issues have contributed to a waning confidence in the company's operations.

Moreover, institutional ownership in AppLovin has reached 41.85%, while insider selling has accelerated, with the CTO Vasily Shikin offloading $12.3 million in shares [2]. This coordinated insider exit strategy has further fueled the selloff, as it signals a reduction in ownership and potentially a lack of confidence in the company's future prospects.

Analysts remain split on AppLovin's stock, with price targets ranging from $386 to $530 despite the sharp decline [2]. While some analysts have maintained a positive outlook, others have downgraded their ratings or raised their price targets. For instance, BTIG has raised its price target to $483 from $480, citing stronger gaming checks and largely positive non-gaming reads [1]. However, other analysts, such as those at Wall Street Zen, have downgraded their ratings from 'buy' to 'hold' due to market concerns [2].

As AppLovin prepares to release its earnings report, investors and analysts alike will be closely monitoring the company's performance metrics and any new developments related to regulatory scrutiny and business practices. The upcoming earnings announcement will provide valuable insights into the company's financial health and operational execution, which will be crucial in determining its future trajectory.

In conclusion, AppLovin's stock has faced significant challenges in recent weeks, with regulatory scrutiny, insider selling, and divergent analyst ratings contributing to a sharp decline in its share price. As the company approaches its second-quarter earnings report, investors will be looking for signs of recovery and positive momentum to justify the company's high valuation.

References:
[1] https://www.investing.com/news/analyst-ratings/applovin-stock-price-target-raised-to-483-from-480-at-btig-93CH-4147772
[2] https://www.ainvest.com/news/applovin-plunges-4-5-intraday-regulatory-scrutiny-earnings-anxiety-fueling-selloff-2507/
[3] https://www.aol.com/why-applovin-stock-slumped-june-190237865.html