AppLovin Stock Tumbles As Short Seller Takes Closer Look At What's Driving Enormous Gains

Core Viewpoint - AppLovin Corp's shares are facing pressure following a short report from The Bear Cave, which alleges ad fraud and questions the quality of the company's revenue growth [1][2]. Group 1: Allegations of Ad Fraud - The Bear Cave claims that AppLovin's stock price has surged approximately 750% over the past year, reaching around 35 times its revenue, primarily due to low-quality revenue from deceptive and predatory ads [2]. - The short seller conducted extensive research within the AppLovin ecosystem, finding numerous ads for obscure real money gambling apps with questionable representations, suggesting that much of AppLovin's revenue growth is driven by these ads [3]. - The report indicates that AppLovin is bombarding players with ads, citing an instance where after playing 40 seconds of a game, users were shown 11 ads [3][4]. Group 2: Market Reaction and Company Performance - Despite the allegations, AppLovin reported a strong quarterly performance, with a year-over-year revenue growth of 44%, leading to a 20% increase in stock price following the earnings report [6]. - As of the time of publication, AppLovin's shares were down 10.4% at $442.78, but the stock has increased approximately 655% over the past year [7].