Short-seller reports on AppLovin and its response

attributedFuzzy Panda Research alleged that AppLovin's AXON 2.0 algorithm is "the nexus of a House of Cards built upon tactics that formers and experts refer to as 'Ad Fraud'", that it had been told AppLovin was taking data from Meta for its e-commerce push, and that AppLovin violated Google's and Apple's app store policies. It said ads were programmed to "click themselves", that children's accounts set to "Do Not Track" received a persistent AppLovin identifier across apps, that an older SDK version collected 50 attributes on children, that user data was sent to third-party data brokers, and that its tests on children's devices showed sexual ads served to girls aged 7 and 12. ¹

qualification

Fuzzy Panda held a short position; its findings rest on its own tests, code review and unnamed former employees. No regulator or court has ruled on these allegations in the record.

response

AppLovin's chief executive called the reports false and misleading, said the company does not track children's data, prohibits apps directed exclusively at children and does not work separately with data brokers.

attributedCiting unnamed former Adjust executives, Fuzzy Panda Research alleged that after buying Adjust, AppLovin whitelisted itself in Adjust's fraud detection and fired a majority of Adjust's anti-fraud team. ¹

qualification

Based on unnamed sources. No regulator or court has ruled on these allegations in the record.

response

AppLovin said Adjust and MAX operations are "entirely independent and transparent, with no conflicts or house bias".

attributedCulper Research alleged that AppLovin used AXON 2.0 largely as a promotional tool and that its growth in mobile games rested on silent app installs from ads. It wrote that AppLovin had introduced Array in late 2022 to install apps on phones through device makers and carriers, and that from late 2022 through at least late 2024 it "smuggled" a permission into thousands of customers' apps via MAX SDK updates that let them bind to Array's AppHub and install apps outside the Google Play store, including in Subway Surfers, 8 Ball Pool, Wordscapes and Angry Birds 2. It said reviews alleged that Bricks n Balls, a game then owned by AppLovin's studio PeopleFun, was installed without consent, with install spikes in Brazil (May 2023) and India (September 2023) shortly after new Array partnerships with Samsung and OPPO, and cited AppLovin staff describing Direct Download as the company's top revenue driver and a Samsung agreement "valued at $1 billion over 4 years". It also alleged that the e-commerce programme was "rigged", with advertisers required to show $600,000 a month of spending on Meta so that AppLovin could see their ads through MAX and take credit for sales. ^{1 2}

qualification

Culper held a short position; its findings rest on its own decompiling of code, app reviews and third-party data. No regulator or court has ruled on these allegations in the record.

response

AppLovin's chief executive said every download results from an explicit user choice, whether through the App Store or AppLovin's Direct Download experience, and that all promoted games comply with App Store policies.

attributedCulper Research wrote in February 2025 that over the previous twelve months insiders had sold nearly $2.0 billion of AppLovin stock and KKR had sold its entire remaining $7.3 billion stake. ¹

qualification

KKR's full exit in 2024 is documented in AppLovin's filings; the dollar amounts were not checked.

attributedMuddy Waters Research alleged that AppLovin is "Just Another Scammy AdTech Company": that about 52% of the e-commerce sales attributed to it are retargeting and only about 25-35% incremental, far below chief executive Adam Foroughi's claim of "nearly 100% incrementality"; that e-commerce customer churn was about 23% in the first quarter of 2025, based on 171 of 755 customer websites dropping the AppLovin pixel between January and March; and that its code systematically violates third-party platforms' terms of service, because its pixel sends Facebook, Instagram, Snap and TikTok identifiers from customers' websites to AppLovin's servers to build "Persistent Identity Graphs" used for fingerprinting without user consent. It further alleged that AppLovin disguised the data collection by renaming a token linked to its Compass Analytics software, which it said had been dropped from AppLovin's two latest annual reports, that AppLovin appeared to collect fewer third-party identifiers after the earlier short reports, "attempting to cover its tracks", and that it risked being deplatformed. The press summarised the report as saying AppLovin funnels targeted ads to users without their consent. ^{1 2 3}

qualification

Muddy Waters held a short position. AppLovin's 2022 annual report described Compass Analytics as a tool within MAX, and the term does not appear in its 2025 annual report (the 2023 and 2024 reports were not checked); the other findings rest on Muddy Waters' own data analysis. No regulator or court has ruled on these allegations in the record.

response

AppLovin's chief executive has denied the short sellers' allegations; Muddy Waters itself quotes his February 26, 2025 statement that AppLovin obtains partner data only to provide advertising services and that Adjust and MAX operate independently.

attributedIn its June 2025 report Culper Research alleged that AppLovin had been backed since at least 2017 by Hao Tang, who in its view controlled, through offshore companies, up to 28% of the Class A shares before the IPO (Angel Pride and Hontai App Fund together) and at least 9.8% at the time of the report. Besides the guarantee, Culper cited AP Investment Capital's trademark applications (saying Hong Kong records name Hao Tang as its sole director), Angel Pride directors it described as Tang proxies, an officer it said holds the same position at Prominence Trust and at Tang's Goldenway group, and addresses shared with other companies it attributes to Tang. ¹

qualification

Culper Research published this while holding a short position in AppLovin; the account is its own and was not adopted by AppLovin or any authority in the record. The 28% figure equals the two holders' combined pre-IPO stakes in the prospectus, but SEC filings attribute Angel Pride's shares to Ling Tang and then Prominence Trust, not to Hao Tang; the Hong Kong and BVI records Culper cites for directors and officers are not retained.