AppLovin (APP.US) is experiencing a panic sell-off, but Citigroup remains bullish: the company's shares are significantly undervalued.

AppLovin (APP.US), the AI application leader, experienced a significant decline of nearly 12% on Monday's US stock market, continuing its massive sell-off trend since hitting a record high of $510 on February 14, with a cumulative decline of over 50%. Despite this, Citigroup reiterated its "buy" rating and maintained a target price of $600, attributing the decline to the "false accusations" in recent bearish reports and the overall sell-off of momentum stocks. Citigroup analysts led by Jason Bazinet wrote in the report: "Based on the revenue growth rate, EBITDA margin, and equity value of peers, AppLovin's reasonable valuation should be $550 per share." Citigroup noted that the current valuation implied a 50% probability that AppLovin's equity value would be zero, which Citigroup called "exceptionally high". Citigroup attributed the market's skepticism about AppLovin to its opaque business model behind its rapid success, rather than the validity of bearish arguments. It is understood that short sellers Fuzzy Panda and Culper recently jointly released a bearish report, accusing AppLovin of fraud and theft, alleging that it artificially inflated the click-through rate (CTR) of ads through hidden click inducement and click fraud, allowing users to click on ads without their knowledge.