Core Insights - AppLovin's shares fell significantly due to an SEC investigation into alleged data-collection violations related to targeted advertising, resulting in a loss of approximately $8.65 billion in wealth for executives and early investors [1][3][4] Investigation Details - The SEC is probing whether AppLovin violated data-sharing rules by using unauthorized tracking tools for targeted ads, following a whistleblower complaint and short-seller reports [3][5] - The investigation could lead to penalties if violations are confirmed, although no wrongdoing has been officially accused yet [5] Financial Impact - AppLovin's stock dropped by 14% in response to the investigation, leading to significant losses for key individuals, including CEO Adam Foroughi, whose net worth decreased by about $3.4 billion [3][4] - Major early investors also experienced substantial losses, with Ling Tang losing $1.7 billion and Hao Tang losing $1.1 billion [4][8] Company Background - AppLovin's market capitalization peaked at $226 billion over the past year but has since declined to approximately $198.8 billion [6] - The company recently joined the S&P 500, despite concerns raised by short-sellers regarding its data practices [6] Stock Performance - Over the past year, AppLovin's stock has increased by 319%, contributing to the rise of three individuals associated with the company into the Forbes 400 [7]

Core Viewpoint - AppLovin Corp. is experiencing a significant shift in investor sentiment following a 700% stock surge, with major investment banks downgrading their price targets due to critical reports from short-selling firms [1][2]. Group 1: Stock Performance and Analyst Revisions - AppLovin's stock price target was reduced by Goldman Sachs from $500.00 to $335.00, and UBS Group lowered its target from $630.00 to $450.00 [2]. - The downward revisions in stock expectations are attributed to multiple critical reports from short sellers [3]. Group 2: Legal Challenges - AppLovin is facing a securities class action lawsuit alleging misleading statements regarding its AXON 2.0 digital ad platform and AI technologies [4]. - The lawsuit claims that AppLovin misrepresented its technology's capabilities and engaged in manipulative practices, including exploiting advertising data from Meta Platforms [4][5]. Group 3: Short Seller Allegations - Muddy Waters Research accused AppLovin of violating app store rules by extracting proprietary IDs without user consent and claimed a high churn rate among e-commerce advertisers [3]. - Other firms, such as Fuzzy Panda Research and Culper Research, have also criticized AppLovin's practices, suggesting data theft and revenue fraud [4]. Group 4: Impact of Reports on Stock Price - Following the release of critical reports on February 26, 2025, AppLovin's share price reportedly fell by more than 12% [5].