There is arguably no company stock that is more divisive among investors at the moment than AppLovin (APP) — not even Tesla.
The adtech company, which surged more than 700% last year – becoming Nasdaq's top performer in 2024 – has now been the target of four short-selling firms this year (so far).
Shares of APP have plunged 18.4% over the last five days.
In fact, things have gotten so volatile that AppLovin CEO Adam Foroughi has responded twice to the short-selling activity.
AppLovin has now retained a lawyer from Quinn Emanuel Urquhart & Sullivan, a firm with deep expertise in securities and corporate investigations, to conduct an independent review into the short report activity targeting the company.
"We are fully committed to defending the Company, its operations, and its reputation from those seeking to manipulate the market through false narratives," Foroughi said in a statement.
"We will take all necessary steps to ensure the facts are known and to protect our employees, stockholders, and partners."
Why AppLovin's technology has been called a 'House of Cards'
In a short-selling report released last week, Muddy Waters's research alleged that AppLovin's AI-powered AXON 2.0 technology is "impermissibly extracting proprietary IDs from Meta, Snap, Tiktok, Reddit , Google, and others" in order to "identify high value users."
According to the report, the company's alleged tactics "appear to be a major violation of the platforms' terms of service," which could lead to AppLovin's de-platforming like Cheetah Mobile.
In February, Fuzzy Panda Research and Culper Research also wrote short-selling reports about APP, also accusing it of a fraudulent advertising scheme.
Fuzzy Panda called APP's AXON 2.0 technology "the nexus of a House of Cards" in its report.
"We believe AppLovin has pulled every trick in the book," the firm wrote. "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."
Foroughi responded to Fuzzy Panda's report in a blog post.
"It's disappointing that a few nefarious short-sellers are making false and misleading claims aimed at undermining our success, and driving down our stock price for their own financial gain, rather than acknowledging the sophisticated AI models our team has built to enhance advertising for our partners," he wrote.
In his second blog post last week, Foroughi took issue with the accusation that AppLovin's pixel is "some outlier in the industry."
Adtech firms use pixels — a piece of code — to track user activity on a website or app.
"Let's set the record straight: our pixel functionality is standard, and we collect the same user behavior as Facebook, Google, and others," Foroughi wrote.
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