Core Viewpoint - AppLovin is facing an SEC investigation regarding its data collection practices, leading to a significant drop in its stock price, which fell over 16% this week [1][3][4] Investigation Report - The SEC is investigating AppLovin for potentially illegal data collection practices aimed at targeting customers for advertisements, with allegations of collecting personal data from mobile applications like TikTok [3] - The outcome of the investigation could result in fines and impact future revenue generation if the company is found to be targeting advertisements more precisely than allowed [3] Stock Performance - AppLovin's stock initially tanked due to the investigation news but later recovered some losses before declining again amid a broader market sell-off [4] - Despite the recent drop, AppLovin's shares have increased by 300% over the past year, with a revenue growth of 77% to $1.26 billion last quarter and a 266% increase in revenue over the last five years [4] Valuation Concerns - AppLovin's stock is trading at a high price-to-sales (P/S) ratio of 37, significantly above the S&P 500 average of 3.4, indicating high growth expectations to maintain current stock levels [5] - The competitive landscape of digital advertising, dominated by large tech companies, presents both opportunities and risks for AppLovin, especially in light of the SEC investigation and short selling reports [6]