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Home33AppLovin Stock Takes a Hit After Muddy Waters’ Short Call

AppLovin Stock Takes a Hit After Muddy Waters’ Short Call

March 27, 2025 Ari Haruni

• AppLovin’s (APP) stock dropped nearly 12% to $290 on Thursday after Muddy Waters’ report estimated that 52% of its e-commerce sales are from retargeting, with only 25%-35% being new business, questioning its growth value.
• The report claims AppLovin violates platform rules by collecting user IDs, risking deplatforming like Cheetah Mobile, or facing copycat competitors if it survives, threatening its market position.
• With a 23% client loss in Q1, Muddy Waters suggests advertisers are noticing weak results, putting pressure on AppLovin’s plans as its stock reflects growing investor unease.

AppLovin Corp. (APP), a company running a mobile marketing platform, saw its stock plummet nearly 12% to $291 during Thursday trading, rattled by a report from Muddy Waters, a research firm betting against it. The firm’s digging into web traffic suggests that about 52% of AppLovin’s e-commerce sales come from retargeting – reaching out to people who’ve already shown interest – but only 25% to 35% of those sales are actually new business, not just repeat customers. This gap raises doubts about how much real growth AppLovin is driving, a concern that could spook the advertisers it relies on to keep the engine running.

Muddy Waters didn’t stop there. They claim to have found code showing AppLovin is grabbing and organizing user IDs from big platforms it works with, a move they say breaks those platforms’ rules. If they’re right, AppLovin could get kicked off those services, much like what happened to Cheetah Mobile years back when it got caught in similar hot water. But even if AppLovin dodges that bullet, the report warns that competitors might just copy its playbook since there’s not much unique tech keeping it ahead—just bold tactics. That could flood the market with rivals doing the same thing, squeezing AppLovin’s edge.

The numbers aren’t looking great elsewhere either. Muddy Waters spotted a 23% dropout rate among AppLovin’s e-commerce clients in Q1, hinting that businesses might be catching on that the platform’s not delivering the bang for their buck they’d hoped for. With shares sliding 12%, the market’s clearly jittery about whether AppLovin can keep its growth story alive. Advertisers want results, not just recycled customers, and if Muddy Waters is on the mark, AppLovin’s got a tough road ahead to prove it’s more than a one-trick pony in a crowded, cutthroat field.

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