Why Applovin Plunged in March

Core Viewpoint - Applovin's shares experienced a significant decline of 18.2% in March, exacerbated by multiple short-seller reports, particularly from Muddy Waters, which raised serious allegations against the company's advertising practices [1][2][3]. Group 1: Short-Seller Allegations - Muddy Waters accused Applovin of employing questionable tactics to inflate its digital advertising revenue, including scraping user data from other social media platforms, which they claim violates app store rules [3][5]. - The report suggested that Applovin's new e-commerce advertisers are only experiencing 25% to 35% incremental demand from their existing social media advertising, contrasting sharply with Applovin's management's claim of 100% incrementality [4]. - Muddy Waters' claims align with previous allegations from other short-seller firms, indicating a broader skepticism about Applovin's business practices [5]. Group 2: Market Context - The technology sector faced a downturn in March, influenced by fears over tariff policies from the Trump administration, which were confirmed to be more severe than anticipated [6]. - The overall negative sentiment in the market was compounded by the release of the short-seller report against Applovin, further impacting its stock performance [6]. Group 3: Company Response - Applovin's management, including CEO Adam Foroughi, has publicly refuted the allegations made in the short-seller reports, asserting that discrediting such claims is straightforward [8]. - The company has engaged law firm Quinn Emanuel Urquhart & Sullivan to investigate the claims made by short-sellers, indicating a serious approach to addressing these allegations [9]. - Applovin has also positioned itself as a potential bidder for TikTok U.S., suggesting confidence in its business model and advertising practices amidst the controversy [10].