The stock of AppLovin (APP) fell 20% as a third short seller raised concerns about the company’s digital advertising practices and claimed it’s violating app store rules.
The 20% decline that occurred on March 27 was the steepest one-day drop ever for AppLovin’s stock, which went public in 2021.
So far this year, the company’s share price has declined 19% as multiple short sellers raise questions about AppLovin’s business practices.
A mobile technology company, AppLovin was founded in 2012 and today helps developers’ market, monetize, analyze, and publish their apps.
The company’s stock skyrocketed more than 700% in 2024, registering the biggest gain among U.S. technology companies last year.
However, AppLovin has now become the target of multiple short sellers.
Muddy Waters Research is the third short seller in as many months to publish a highly critical report about AppLovin that’s raised red flags about the company and its management.
Muddy Waters claims that AppLovin’s advertising tactics violate app store terms of service by “impermissibly extracting proprietary IDs” from the likes of Meta Platforms (META) 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 has defended its practices and accused the short sellers of trying to profit from its share price decline.
The stock of AppLovin is currently trading at $261.70 U.S. per share.