AppLovinAPP

sat atop the Nasdaq-100 and S&P 500 to end 2024, capping a year that saw the mobile gaming upstart ascend more than 700%. Alas, its ascendance — which we recapped in a Dec. 2024 roundup — might have been too good to be true, as investors are identifying that many of the mobile marketing firm’s claimed growth could be too good to be true.

AppHatin to see it: In January, researcher Lauren Balik boldly claimed that AppLovin’s growth was fraudulent — and was short. In the weeks that followed, Balik’s ire revealed a pyramid scheme key to the company’s e-commerce expansion and a scheme intended to get users to download and make purchases on their mobile games, fraudulent tactics have spurred concern about the legitimacy of the firm’s rise. That’d be an attractive enough offer for any short seller, but the irony is that after four unique reports have taken aim at the business, we’re still finding out new — and bad — things about 2024’s best-performing stock.

• In recent weeks, short sellers such as Fuzzy Panda Research, Culper Research, and The Bear Cave have published reports on AppLovin — separately taking aim at alleged ad fraud, illegal data harvesting, and other misrepresentations about the business.
• AppLovin CEO Adam Foroughi addressed the short sellers in a blog post on Feb. 26, denying claims that the gaming tech upstart is engaging in criminal activity, running click farms, or making material omissions in its financials.

The Shorts Keep Coming

At the time, the reports were seen as titillating enough to convince the S&P Index Committee to exclude the fast-growing firm in their quarterly rebalance. That might have been wise. AppLovin has lost half of its value since Feb. 14, with its decline bringing its valuation to $89.6B. And still, there are reports coming.

• On Thursday, prolific short seller firm Muddy Waters joined others in claiming that the app distribution giant was at risk of being “deplatformed” because of its business practices —APP
  fell 20%.
• They add that AppLovin’s promising new e-commerce segment, which purported to boast high conversions and retention, is overstated — and its tactics could violate platforms’ terms and conditions.

But Wall Street remains optimistic… Despite everything detailed, Bloomberg reports thatAPP

stock still has 21 buy ratings, six holds, and just one sell — which flies in the face of the mounting short seller blitz against the company. In fact, some institutions insist that the recent decline is an opportunity. However, we’ll have to see whose infatuation is more founded — Wall Street’s obsession with the company’s metrics or the short sellers.