AppLovin Short Report from Fuzzy Panda

Investment Analysis Clubs Saul’s Investing Discussions
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Fuzzy Panda (?) released a short report yesterday (2/25/25). Here’s what Perplexity has to say about it:

  1. Allegations of “Ad Fraud”: The report accuses AppLovin of engaging in dubious practices and potentially illegal activities2.
  2. Data theft claims: Fuzzy Panda alleges that AppLovin may have reverse-engineered data from Meta Platforms Inc2.
  3. App store policy violations: The report suggests AppLovin might be breaching policies set by Apple and Google2.
  4. Questionable e-commerce practices: Fuzzy Panda claims AppLovin’s expansion into e-commerce involves exploiting consumer data in ways that violate app store terms of service2.
  5. “Direct Download” program: The researchers claim to have uncovered evidence of a program that could allow AppLovin to install apps on consumers’ phones without consent2.
    Of course there’s an immediate knee jerk reaction based on the accusations.

This is either a great opportunity to buy into the stock, or bail before it gets hurt any worse. I’m not selling.

Here’s a link to the report (I’ve not read it yet)
https://fuzzypandaresearch.com/app-stock-meta-google-malware-mobile-games-advertising/

Well, I’m part way through the very long report. It’s very damning. There’s a lot of “we believe” comments. But, I don’t know . . .

A lot of the accusations involve ad behavior in AppLovin games - the part of the company they just sold to a third party. Why would they let control of those games leave their span of control?

@intjudo says he sold due to the report. That may be the best decision, I really don’t know, but the very long short report (short reports are always very long - they wish to give the impression of validity based on length) has a lot of details. The thing I find most damaging is the background the provide on AppLovin founders. It’s not good. I’ve tried to research CEO Adam Foroughi before and found nothing - I mean nothing, not good, not bad, just nothing. Maybe there’s a legitimate reason for that extremely low profile. This is quite unsettling.

Nevertheless, the feeding frenzy on the stock is abating. So I am doing nothing right now.

I keep adding to this post as I read more of the short report, but here’s something that seems very odd to me. Appendix B of the report provides instructions on how to build a test that confirms that APP is using META’s data. The reason I find it odd is that you don’t need to test this. It’s clearly obvious because APP’s auction platform, MAX obviously collects that data and makes it available to AXON for analysis. Is that a shady practice that META will shut down? I don’t think so. It’s clearly right in the open even if your not super-tech kind of person. I can’t believe that META would find this to be a revelation.

This probably my last edit on the post. There’s a “terms of service agreement” at the very end of the report. The following quote is probably standard language in every short report, but who really reads TOS agreements?

“You further agree that you will not rely on any information in this report or on this website, to do your own research and due diligence before making any investment decision with respect to companies or securities mentioned herein, and that you will consult with your own investment professionals prior to any investment decisions.”

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Such short reports seem to be increasing year on year, at least that’s how it seems.
I’ve seen a number of my holdings hit by such reports recently (Pagaya, Supermicro, and now APP). I haven’t looked into this latest one. Anyone can write anything too easily. Short reports have ulterior motives to bring the price down. Im not selling either. SMCI is recovering after the short report. I’m sure APP will too.

Jonathan

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Another short seller Culper also came out with a report this morning on APP this morning. Both insinuating fraud. Seem to be coordinating in a low-liquidity time when these style of stocks are vulnerable.

Bnh

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My initial assessment is they present details that to me may back at least some of their claims.

I sold my position. I’ll monitor the situation to see if I think there’s an opportunity to get back in if/once the dust settles.

I’m no expert in this stuff so take this with plenty of salt.

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As of February 26, 2025, there is no evidence that Apple, Google, or Meta have developed specific data collection or data sharing restrictions directly targeting Applovin. However, these companies have implemented broader privacy policies and are under regulatory scrutiny, which indirectly affect Applovin’s ability to collect and share data … some claims do align with broader industry issues. Ad fraud is a known problem—Juniper Research pegged it at $84 billion in 2024—and regulators have cracked down on companies like Meta for data mishandling. If Applovin’s practices are as egregious as alleged, it’s plausible they’d face scrutiny, but no concrete actions (e.g., fines, bans, or lawsuits) have emerged by February 26 to back this up. The report’s reliance on insider testimony and opaque studies, without public documentation like court filings or whistleblower leaks, leaves its substantiation shaky for now, IMO.

In short, while the report raises valid red flags that could impact Applovin’s revenue if proven—like losing advertiser trust or facing platform bans—nothing in the short reports are definitively substantiated yet with hard, public evidence. They’re a mix of compelling allegations, some technical hints, and expert quotes, but it’s still in the realm of “claims” rather than “facts” until regulators, courts, or Applovin itself weigh in with more transparency. We need to watch for developments like an FTC investigation or an Apple/Google response to see if these hold water. What do you think—does the lack of hard proof sway your view on it?

I don’t see this as comparable to what went down with Super Micro. I’m looking to add here.

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The more a short report throws in everything but the kitchen sink, the less credible it seems. If there were a single smoking gun, there’d be no need to pad the case with weaker, misleading claims. As I went through the report, I found several statements that were either incorrect or misleading

Example:

  1. Applovin subsidiary got in trouble for tracking children in 2017 before Applovin bought it in 2021.
  2. Google, Epic, Youtube paying big fines to the FTC. All of those companies are extremely profitable after paying the FTC fines.

Maybee I’m missing the point but in the Appendix B, it makes it seems like AppLovin is stealing the data but then it says this as the 5th point.

Behind the scenes, Meta will see this and bid to show you a Ridge ad on AppLovin’s auction platform.

Which means that Meta is participating with Applovin. They are either selling data to Applovin or buying adds from Applovin. Either way is completely different than Applovin stealing/copying Meta’s Homework.

Drew,
Long APP

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I pointed out earlier that Appendix B is not some great revelation which demonstrates that AppLovin is stealing data from META. Some time ago during a CC the CEO flat out mentioned that META (among other biggies) have reluctantly come to use their auction platform, MAX. So of course APP has this data. This is obvious public knowledge (or it should be).

Further, it’s no secret that MAX transaction data is fed into AXON in order to enrich the training data. Again, Adam (CEO) said so during a CC, just in case it wasn’t obvious to some. Yet, Fuzzy Panda offers this as more “evidence” that AppLovin is engaged in unsavory conduct and when discovered by META, etc., they’ll take some action. Like what? Stop using MAX? And then use what as an alternative instantaneous auction platform? Oh yeah, there ain’t one.

Actually, I wouldn’t be surprised to learn that some of their conduct is unsavory. Just Like META, Alphabet, X, TikTok, etc. Unsavory is not illegal. META uses MAX because there’s no viable alternative for placing ads on mobile devices.

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The great bulk of the stuff in FP’s report isn’t enough to sink $APP imo, even if it’s true. And I agree: if you have smoking gun, why would you then pad your case with a bunch of tertiary stuff?

To me the pivotal question is whether or not $META is 100% aware of, and cool with, the data they are getting from $META, and the way they are obtaining and using $META’s data. And I agree with @brittlerock that it’s hard to imagine these short-sellers have somehow uncovered something that’d surprise $META; they have hoards of the world’s best engineers working for them and it’s hard to imagine they haven’t been dissecting $APP’s methods all this time.

There’s a distinct possibility I sold too quickly. Interesting, though, that $APP still hasn’t responded to these reports?

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APP CEO is out with a response to the short reports

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-Wedbush also put out a note on APP, see below.

UBS analyst also out defending APP, maintains buy rating and $630 pt

Wedbush notes that AppLovin has been “blasted by a series of short reports” this morning, but the firm thinks the reports are “misguided” and argues that if AppLovin is, in fact, committing fraud, the firm finds it “highly unlikely that it has yet to face a legal challenge from former employees, Facebook, advertisers or competitors.” The firm also finds it “inconceivable that no regulators, attorney generals nor legal authorities have yet begun an investigation,” while noting that the company’s financial reports are audited and the auditors have not raised any fraud issues. Wedbush maintains an Outperform rating and $620 price target on AppLovin shares.

[Short reports targeting AppLovin ‘misguided,’ says Wedbush | Markets Insider](Short reports targeting AppLovin ‘misguided,’ says Wedbush | Markets Insider

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Good enough for me; I’m back in, at basically the same price I sold at.
…though, with a smaller position; it had gotten to a huge percentage of my portfolio.
Too bad I hadn’t already been trimming on the way up; looks like I learned multiple lessons today :slight_smile:

I used the proceeds to add to some existing positions like $HIMS, $ANET, $PSTG

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Blockquote

Our e-commerce pilot is performing exceptionally well. The current requirement for a minimum monthly media spend is designed to justify the resources needed for manual onboarding. We plan to expand our self-service tools and gradually lift these requirements over the year. To highlight our success, in December, we reached a run rate of roughly $1 billion a year of gross advertiser spend in the e-commerce category alone from around 600 customers.

I hope I got the formatting correct…
That is a snip from the applovin ceo’s blog post/takedown of the short “report”. Better to call it a short con.

Note the $1B run rate in the e-commerce pilot with only 600 customers!

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