AppLovin Hires Law Firm to Probe Short-Seller Allegations (1)

AppLovin Corp. has hired a law firm to investigate short sellers’ allegations that the mobile advertising company is fraudulently juicing ad performance numbers on its platform.

The company retained the Quinn Emanuel Urquhart & Sullivan law firm to conduct an “independent review and investigation into recent short report activity,” AppLovin said in a statement on Friday. It followed a Muddy Waters report released on Thursday that alleged that AppLovin was misappropriating data and violating some of its platform partners’ terms of service, among other things, triggering a 20% drop in shares.

Shares rose 6.1% to $277.73 at 11:37 a.m. in New York on Friday after the announcement.

Read More: AppLovin Shares Sink After Muddy Waters Says It’s Short

AppLovin, which helps mobile app developers find users and sell advertising in their apps, had a blistering rally in 2024, with shares soaring more than 700%. But a series of short-seller reports last month — including by Fuzzy Panda, Culper Research and Lauren Balik — have taken their toll on the stock.

The reports alleged that AppLovin was using techniques to make it look as though its platform was delivering better results for advertisers than it really was. One way it allegedly did this was through attribution fraud, where a company hijacks the credit for an app install or purchase that was really triggered by an ad on another company’s platform. AppLovin said the February reports were “littered with inaccuracies” and published a blog post on Thursday stating that Muddy Waters’s report exaggerated standard industry practices to “stoke fear.”

“We will take all necessary steps to ensure the facts are known and to protect our employees, stockholders, and partners,” said AppLovin Chief Executive Officer Adam Foroughi in the statement on Friday.

(Updates with shares)

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Olivia Solon in London at osolon2@bloomberg.net

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Amy Thomson at athomson6@bloomberg.net

Olivia Solon

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