Essential Details
- AppLovin’s shares experienced a significant drop on Wednesday after short sellers published two reports concerning the firm.
- These documents claim various fraudulent and deceptive practices, indicating that such actions could result in Apple, Meta Platforms, and Google prohibiting AppLovin’s offerings.
- The decline in stock price on Wednesday represents the seventh consecutive day of losses for AppLovin.
AppLovin (APP) stock plummeted by as much as 22% on Wednesday following revelations from two short-selling firms accusing the technology company of partaking in numerous fraudulent and misleading practices.
The firm’s shares had skyrocketed over 700% in 2024, positioning it as the leading performer in last year’s Russell 1000 index. This remarkable surge was driven by revenue growth and investor excitement surrounding its AXON 2.0 AI model, which improves the effectiveness of aligning advertisements with mobile games.
On Wednesday, AppLovin chose not to comment on the reports from short sellers.
Earlier this month, AppLovin’s stock achieved an unprecedented closing peak of $510.13, reflecting an increase of over 57% since the year’s start. However, in recent weeks, the stock has encountered a downturn for seven straight trading days due to diminishing interest in several AI-related stocks.
Culper Research Argues AI Claims are Deceptive
A report from Culper Research asserts that AppLovin’s claims regarding the AI-driven efficacy of AXON 2.0 are simply promotional exaggerations intended to conceal its genuine sources of growth.
We contend that AppLovin’s achievements do not arise from AI but rather from systematically integrating and capitalizing on risky app permissions that subtly initiate backdoor app installations, stated analysts from Culper Research. Toncoin (TON) Value Forecast for March 26th
As per the findings from Culper’s report, AppLovin’s application can be pre-loaded on a variety of Android devices, permitting users to install applications directly without utilizing Google’s Play Store. This capability allows AppLovin to promote itself within the mobile gaming industry and download additional mobile games without the users’ approval, enhancing the perceived effectiveness of their advertisements while boosting revenue for each installation, as highlighted by the short-seller.
Fuzzy Panda has asserted that AppLovin’s e-commerce advertising solutions take advantage of metadata. Conversely, analysts from Fuzzy Panda Research have accused AppLovin’s growing e-commerce advertising operations of essentially pilfering data from Meta Platforms. They alleged that AppLovin leverages consumer information from advertisements displayed on Meta platforms such as Facebook and Instagram to reconstruct Meta’s advertising metrics, making their own ads appear more effective than when executed separately. They also pointed out that AppLovin’s software has the capability to monitor users, including minors, without acquiring consent.
Even in the absence of substantial penalties from the Federal Trade Commission or repercussions for breaching California privacy regulations, the authority to restrain AppLovin’s unethical business practices rests with three leading tech firms—Apple, Google, and Meta, the short-seller noted, forecasting that these corporations will take measures against AppLovin’s software.
Recently, AppLovin’s share price fell by nearly 16%, settling around $318, although this figure remains approximately five times its worth from the previous year.
