The stock of AppLovin (APP) is down 20% as a third short seller raises concerns about the company’s digital advertising technology and claims that it is violating app store policies.
The 20% decline on March 27 was the steepest one-day drop ever for APP stock, which went public in 2021. So far this year, the company’s share price has fallen 19% as multiple short seller reports raise questions about AppLovin’s business practices and pressure the stock.
A mobile technology company headquartered in Silicon Valley, AppLovin was founded in 2012 and today helps developers market, monetize, analyze, and publish their apps. The company and its stock have been hugely successful. APP stock soared more than 700% in 2024, registering the biggest gain among U.S. technology companies for the year.
However, now AppLovin has become a target of multiple short sellers.
Growing Criticisms
Muddy Waters Research has become the third short seller in as many months to publish a highly critical report about AppLovin that’s meant to raise red flags about the company and its management team.
Muddy Waters claims that AppLovin’s advertising tactics systematically violate app stores’ terms of service by “impermissibly extracting proprietary IDs” from the likes of Meta Platforms (META), Reddit (RDDT) and Alphabet (GOOGL). The report also says that AppLovin is funneling targeted ads to users without their consent.
Other short sellers have criticized AppLovin’s proprietary software, which has driven the company’s earnings growth and stock gains. AppLovin CEO Adam Foroughi has defended the company from previous attacks, accusing the short sellers of trying to profit from its decline.
Is APP Stock a Buy?
The stock of AppLovin has a consensus Moderate Buy rating among 17 Wall Street analysts. That rating is based on 11 Buy, five Hold, and one Sell recommendations issued in the last three months. The average APP price target of $537.36 implies 105.33% upside from current levels.
