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Shares of AppLovin tumbled 16% Wednesday as two short seller reports cast doubt on the integrity of the company’s artificial intelligence-powered AXON advertising software that helped drive the tech giant to become the top-performing tech stock of 2024.
Short seller Fuzzy Panda alleged that the AXON model was “the nexus of a House of Cards” built on fraudulent advertising tactics.
“We believe AppLovin has pulled every trick in the book,” the post stated. “We’ve been told they are stealing data from Meta in their e-commerce push. We also discovered AppLovin exploiting consumers and their data in ways which are clear violations of Google and Apple’s app store policies.”
The reports from Fuzzy Panda and Culper Research come following a stellar fourth-quarter earnings beat in February that kept Wall Street feeling bullish on AppLovin. CEO Adam Foroughi announced the company would spin off its mobile gaming segments and continue expanding the AXON model to other e-commerce sectors, such as health care, automotive and more. AppLovin’s advertising revenue climbed 73% in the quarter to reach almost $1 billion.
“We believe AppLovin’s recent success in mobile gaming stems from the systematic exploitation of app permissions that enable advertisements themselves to force-feed silent, backdoor app installations directly onto users’ phones, with just a single click — an event that is often inadvertent thanks to the Company’s notorious UX gimmicks,” wrote analysts at Culper Research.
The Palo Alto-based company’s stock surged over 700% in 2024 and was the top performer in the sector, becoming one of the biggest beneficiaries of the AI boom coupled with a growth in online advertising.
Fuzzy Panda confirmed to CNBC that the firm was still short on AppLovin. Culper Research, which shared some research with Fuzzy Panda per a letter from Culper Research founder Christian Lamarco, did not immediately respond to a request for confirmation at the time of publication.
AppLovin declined to comment.
