AppLovin, APP 0.00%↑ shares were down almost -20% over the last 24 hours due to some scary short seller headlines that I’m going to explain why you can feel free to ignore them.
The company’s stock had temporarily tanked when it was reported that AppLovin was being probed by the SEC over its data collection practices.
The SEC looking into a complaint is not new evidence of wrongdoing. In fact, the SEC was responding to complaints first made back in February and March. I’ve been reporting on the short attacks and the misinformation on AppLovin all year.
Check out my archives at the end of Q2 and the one last month when they reported at Goldman Sachs Communicopia.
The SEC is looking into old debunked allegations. Specifically, they claim that AppLovin has violated their platform partners service agreements to push more targeted advertising to consumers.
The fear is that they’ll have to change their ad algorithm and that will cause the business to crumble. Well, AppLovin’s ad partners are some of the biggest companies on Earth, Google GOOG 0.00%↑ , Apple AAPL 0.00%↑ , Meta META 0.00%↑ and Amazon AMZN 0.00%↑. To date, none of them have taken any action against AppLovin, and I have no reason to believe why this would change now.
AppLovin has debunked all these allegations multiple times. You can check the website as early as March, where they explain the technical nature as to why they are still allowed to be in the various app stores.
Most importantly, short sellers are banking on the fact that you do not know how performance advertising actually works. AppLovin currently has so much demand from new advertisers who want to join their platform. On October 1st, they opened up their Axon AI powered recommendation engine to a host of new customers.
Shorts also ignore that AppLovin is in the middle of a virtuous revenue cycle.
As more advertisers come to the platform, they bring more money. And as more money comes to the platform, game publishers will decide to open up more of their games to in-game advertising, which creates more inventory and the cycle repeats.
Further proof you should ignore the shorts – AppLovin stock recovered almost all the losses in the span of just one day. It wildly outperformed the market indices today up over 7% in just one session.
-Accrued Interest
Disclaimer: The information presented in this Substack is for educational purposes and should not be construed as investment advice. Investors should make their own decisions regarding the prospects of any company discussed here, as I am not a registered investment advisor.
You can always reach me at simeon@accruedint.com.
