AppLovin (APP, Financial) experienced a significant 20% drop in its stock price, marking the largest single-day decline, following a short-seller report by Muddy Waters. This report is the third in about a month targeting AppLovin, a company providing marketing services for app developers. Earlier, Fuzzy Panda and Culper Research also released reports that led to a decrease in the company's stock. Additionally, The Bear Cave had issued a cautious evaluation of AppLovin's stock days before these reports.
Once a standout tech stock in 2024, AppLovin's shares soared over 700% due to the AI boom, and the company was added to the Nasdaq 100 index in November, pushing its market value over $110 billion by year-end. However, as of the latest market close, AppLovin's stock has fallen 19% this year. The company has not immediately responded to requests for comments.
Muddy Waters accused AppLovin of data theft and violating platform service terms. Previous reports from Fuzzy Panda, Culper, and The Bear Cave alleged that AppLovin exaggerated its AI platform's capabilities and increased revenue by forcing users to install applications. AppLovin had previously dismissed these February reports as containing "inaccurate information and false assertions." CEO Adam Foroughi expressed disappointment over misleading statements by short-sellers aimed at undermining the company's success.
Muddy Waters, founded by Carson Block, is one of Wall Street's most feared short-selling firms. Block recently stated that despite Tesla's recent stock decline, he wouldn't short Tesla, acknowledging Elon Musk's ability to achieve remarkable feats.
Despite the multiple short-seller reports, Wall Street maintains a generally positive outlook on AppLovin. According to Bloomberg data, the company holds 21 buy ratings, 6 hold ratings, and only 1 sell rating. After the February reports triggered a stock decline, analysts from firms like Wedbush, Benchmark, Citi Research, and Bank of America defended AppLovin, even suggesting the dip as a buying opportunity.
