Applovin's Stock Plunges Amid Accusations of Misleading Customers and Investors
Shares of AppLovin plummeted 22% this week due to allegations from two short-seller hedge funds accusing the company of misleading customers and investors through its Axon 2.0 digital ad platform. The accusations include reverse-engineering ad data from Meta Platforms and making deals with mobile handset and network companies without user approval, violating app store policies. AppLovin CEO Adam Foroughi has denied these allegations, citing the sophistication of his team's AI models.
- The sudden turn of events may be attributed to the high valuations of rapidly rising stocks like AppLovin, which can make them vulnerable to short-seller attacks aimed at driving down their prices.
- How will AppLovin's reputation and stock price recover if investors ultimately dismiss the allegations as unfounded or if new evidence emerges that supports the claims made by the short-sellers?