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Key Stats for AppLovin Stock
- Price Change from All-Time High: -33%
- Current Share Price: $344
- 52-Week High: $525
- APP Stock Price Target: $461
What Happened?
AppLovin (APP) stock has experienced significant volatility, declining 33% from its all-time highs despite delivering exceptional financial results.
The tech stock’s retreat comes amid a coordinated attack from multiple short-selling firms, raising concerns about its advertising practices and AI-powered AXON technology.
The latest catalyst for the decline was a scathing report from Muddy Waters Research, which sent shares plummeting 20% in their steepest single-day drop on record.
The short-seller alleged that AppLovin’s advertising tactics “systematically” violate app store terms of service by impermissibly extracting proprietary IDs from major platforms, including Meta, Snap, TikTok, Reddit, and Google, to funnel targeted ads without user consent.
This marked the third short-seller attack since February, following earlier reports from Fuzzy Panda Research and Culper Research that questioned AppLovin’s AXON software and business practices.
The coordinated nature of these attacks has created sustained selling pressure despite a strong operational performance.
The short-selling campaign has overshadowed AppLovin’s impressive Q1 results, where it reported $1.48 billion in revenue (beating estimates of $1.38 billion) and earnings of $1.67 per share (versus $1.44 expected).
Advertising revenue surged 71% to $1.16 billion, while it announced the strategic sale of its mobile gaming business to Tripledot Studios for $400 million in cash plus a 20% equity stake.
Adding to the uncertainty, AppLovin’s ambitious proposal to merge with TikTok’s non-China operations has raised eyebrows, with CEO Adam Foroughi acknowledging it’s “a long shot” but demonstrating the company’s willingness to pursue transformative opportunities.
See AppLovin’s full analyst estimates, earnings results, and earnings transcript (It’s free) >>>
What the Market Is Telling Us About APP Stock
The decline in APP stock reflects the market’s struggle to distinguish between legitimate concerns and short-seller noise.
While the allegations are serious and warrant investigation, AppLovin’s operational metrics continue to demonstrate the strength of its AI-driven advertising platform.
Its 40% revenue growth, 83% EBITDA growth, and strong guidance for Q2 ($1.195-$1.215 billion in advertising revenue) suggest the underlying business remains robust.
AppLovin’s strategic decision to divest its gaming business and focus entirely on advertising represents a smart capital allocation move, allowing management to concentrate resources on its highest-growth, highest-margin opportunity.
CEO Adam Foroughi has vigorously defended the company’s practices, characterizing the short-seller reports as “false and misleading claims” designed to profit from stock price declines.
However, investors should monitor whether regulatory scrutiny emerges from these allegations. If AppLovin’s practices are found to violate the platform’s terms of service, it could face significant operational disruptions.
Alternatively, its aggressive expansion into e-commerce and web advertising, including plans for a self-service dashboard, provides diversification beyond mobile app advertising.
For long-term investors, the current volatility may represent an opportunity to own shares of a rapidly growing AI-powered advertising platform at a discount.
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any stocks mentioned. Thank you for reading, and happy investing!
