Investors Lose $8.65B as SEC Probes AppLovin's Data Practices

AppLovin (APP) shares fell sharply on Monday following a Bloomberg report indicating the U.S. Securities and Exchange Commission (SEC) is investigating the mobile advertising firm over potential data-collection violations. The probe centers on whether AppLovin breached agreements with partners by using unauthorized tracking tools to deliver targeted ads to consumers. According to sources familiar with the matter, the SEC is responding to a whistleblower complaint filed this year and multiple short-seller reports, though neither the company nor its executives have been formally accused of wrongdoing AppLovin stock tanks report SEC investigating company data^[1].

The stock dropped 14% during regular trading after the report, with further declines of 5% in extended hours, erasing approximately $8.65 billion in wealth for top executives and early investors. CEO Adam Foroughi's estimated net worth fell by $3.4 billion, while cofounders and pre-IPO investors lost hundreds of millions apiece. AppLovin's shares have surged 319% over the past year, driven by its AI-powered ad targeting technology, but the recent sell-off reversed significant gains Reported AppLovin SEC Probe Wipes Out $8.65 Billion For Its Top Executives And Early Investors^[2].

AppLovin's spokesperson declined to comment directly on the investigation but stated the company "regularly engages with regulators" and addresses inquiries in the ordinary course. "Material developments, if any, would be disclosed through appropriate public channels," the spokesperson added AppLovin stock tanks report SEC investigating company data^[1]. The company joined the S&P 500 in September, replacing MarketAxess Holdings, despite a short-seller campaign led by Fuzzy Panda Research to block its inclusion. Muddy Waters Research, another short-seller, accused AppLovin of violating app store policies by impermissibly collecting user IDs from platforms like Meta, Snap, and Google Reported AppLovin SEC Probe Wipes Out $8.65 Billion For Its Top Executives And Early Investors^[2].

The investigation adds to ongoing scrutiny of AppLovin's data practices. Earlier this year, Fuzzy Panda and Culper Research published reports criticizing the company's AXON software, which underpinned its earnings growth and stock surge. A 12% drop in February followed these reports, and Foroughi defended the company's technology in a blog post, dismissing short-sellers as "profit-seeking actors." Analysts remain divided: Wedbush Securities reiterated an "outperform" rating and raised its price target to $745, citing AppLovin's growth potential, while others warn of regulatory risks AppLovin stock tanks report SEC investigating company data^[1]AppLovin Stock Falls On Report Of SEC Probe - Investor's Business Day^[3].

AppLovin's market cap has declined from a peak of $226 billion to $198.8 billion, reflecting broader concerns over data privacy and regulatory enforcement. The SEC's focus on data collection practices aligns with its broader efforts to address tech-driven privacy risks, particularly in the ad-tech sector. While the agency has not yet imposed penalties, the investigation could influence AppLovin's future compliance strategies and investor sentiment.