AppLovin Shares Were Up Today: What’s Going On?

AppLovin Corporation APP shares are trading higher friday as the stock appears to be reversing after initially dropping 20% earlier in the week following a short-seller report from Muddy Waters.

What To Know: Muddy Waters alleged that AppLovin’s e-commerce operations rely heavily on retargeting, with more than half of its conversions coming from this practice. The report claimed that only 25%-35% of AppLovin’s sales are truly incremental, challenging the company’s growth narrative. It also accused AppLovin of extracting user data from major platforms like Meta, Google and TikTok to build artificial user graphs, potentially violating platform terms of service.

The report further alleged that AppLovin uses persistent identity graphs to retarget high-value users, making detection difficult. Muddy Waters cited a 23% churn rate among AppLovin’s e-commerce beta advertisers, which contradicts the company’s previous statements of near-zero churn. The short seller warned that AppLovin could face the risk of deplatforming, similar to past cases such as Cheetah Mobile.

AppLovin has not yet responded to the allegations.

APP Price Action: AppLovin shares were up 4.31% at $272.96 at the time of writing, according to Benzinga Pro.

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