AppLovin’s stock dropped 20% in a single day last week, and CEO Adam Foroughi responded by doing what any self-respecting adtech boss would do when accused of fraud, manipulation, and shady pixel voodoo: he called bullsh*t and hired Elon Musk’s lawyer. Yes, really. 

(Source: Giphy) 

In short, after Muddy Waters Research dropped a short report that basically accused AppLovin of everything but kicking puppies, Foroughi went full scorched earth in a blog post, telling investors to “dig deeper,” insisting the claims could be debunked “in minutes” by AI tools like Grok. The TL;DR of the report? AppLovin’s ad tech supposedly violates app store policies, scrapes user data like it’s on sale at Costco, and relies more on retargeting than actual customer acquisition.

And in turn, Foroughi’s response in essence is this: You don’t get our tech. It’s complicated. You're scared because we're good. Translation: Haters gonna hate.

(Source: CNBC) 

Now of course, while that’s valid to some extent, here’s where it gets girthy: AppLovin didn’t just clap back in the comments section—they brought in Alex Spiro, the Quinn Emanuel pitbull who also happens to be Elon Musk’s go-to legal hitman. The guy who’s defended billionaires, celebrities, and probably a Bond villain or two. Spiros task is simple, launch an “independent investigation” into the short-selling activity, which in PR terms means: we’re going to flip over every rock until we find something actionable—or at least intimidating enough to make you think twice before dropping another 30-page PDF on Twitter.

Keep in mind, this is the third short report dumped on AppLovin in the last year (shoutout to Fuzzy Panda and Culper Research for the early hits), and the company’s patience is clearly gone. After riding a 700% gain over the past 12 months and becoming the most valuable ad tech firm on the planet, AppLovin was the belle of the algorithmic ball. But now? They’re fielding class-action lawsuits, laying off employees, and watching their stock price get kicked in the teeth.

(Source: Yahoo Finance) 

What’s more, is that despite the pummeling, they’re still putting up bigly numbers. Revenue was up 44% year-over-year. Loop Capital reiterated a buy rating and slapped a $650 price target on the stock. But again, none of that matters when three separate research shops are accusing you of inflating metrics, abusing app ecosystems, and running what looks suspiciously like performance marketing theater. Investors don’t wait for the facts—they sell first and let the lawsuits sort it out. 

Not to mention that the real problem at the heart of this debacle is the fact that AppLovin’s business is, by design, hard as hell to understand. It’s a Frankenstein of ad exchanges, AI models, bidding algorithms, and e-commerce integrations that would make even Wall Street quants squint. That complexity is a feature when things are going great. But when it isn’t? It’s a feeding frenzy for short sellers who know most people won’t read past the executive summary.

(Source: Giphy) 

So with that said, what now? Well, if Spiro’s review clears AppLovin, it’ll be a major win for the company and a giant middle finger to the short crowd. If it doesn’t—or worse, if the lawsuits start sticking—expect more than just a dip. Of course, Foroughi says they’re building the “world’s best advertising AI.” Muddy Waters says they’re building a house of cards. And Wall Street, as usual, is somewhere in between—watching, trading, and waiting to see who blinks first.

For now, AppLovin has clapped back on the allegations—now we wait to see if the punch really sticks or not. In the meantime, place your bets accordingly, and in the wise words of Peter Lynch, “Only invest in what you understand”---and for most investors, AppLovin isn’t understandable at all. Until next time, friends! 

P.S. Lockheed just experienced a major $5 billion defense contract win. Meaning, we’ll be keeping a close eye on defense stocks heading into today's opening bell as the defense industry continues ramping up their projects. We could see some massive explosions ahead (pun definitely intended) so make sure you’re in the Stocks.News premium club to be the first in the know—before every Joe, Dick, and Harry end up crashing the party… 

Stocks.News does not hold positions in companies mentioned in the article.