Yet Another APP Short Report

The following is from Perplexity AI

Summary of Culper Research’s Short Report on AppLovin

Overview

On June 12, 2025, Culper Research published a scathing short report on AppLovin, alleging a range of deceptive practices and questionable business tactics. The report follows previous short-seller scrutiny and has contributed to significant volatility in AppLovin’s stock price.


Key Allegations from Culper Research

  • Undisclosed Agency Agreements: Culper claims that in January 2025, AppLovin entered into undisclosed agency agreements with two Chinese AdTech firms to expand its cross-border business, raising transparency concerns for investors and regulators1.
  • Misleading Use of AI (AXON 2.0): The report argues that AppLovin’s much-touted AI platform, AXON 2.0, is primarily a promotional tool and a “smokescreen” to obscure the real drivers of revenue, which Culper says are not AI-related5.
  • Backdoor App Installs: Culper alleges AppLovin exploits app permissions to enable advertisements to “force-feed” silent, backdoor app installations with a single click—often inadvertently triggered by users due to manipulative UX design56. These installs, according to Culper, directly translate into profits because AppLovin is paid per install.
  • Copying Meta’s Data and Practices: The report accuses AppLovin of copying Meta’s advertising strategies and, in some cases, misappropriating data from Meta as part of its e-commerce initiatives56.
  • Violations of Platform Policies: Culper, alongside other short sellers, claims that AppLovin’s practices violate Google and Apple app store policies, particularly regarding user data and ad targeting56.

Market Reaction and Broader Context

  • The short report contributed to a sharp decline in AppLovin’s share price, with the company losing over $13.7 billion in shareholder value earlier in 2025 after similar reports by Fuzzy Panda Research and others567.
  • Other short sellers, including Fuzzy Panda and Muddy Waters, have echoed and expanded on these concerns, alleging fraudulent advertising tactics, misappropriation of data, and “scammy” practices67.
  • Despite these controversies, AppLovin’s stock had previously surged on the back of strong revenue growth and optimism around its AI-driven ad technologies67.

Industry Perspective and Critique

  • Some industry analysts argue that many of the practices highlighted by Culper—such as pre-loads, one-click installs, and aggressive user acquisition tactics—are common across the adtech industry, not unique to AppLovin3.
  • There is skepticism over the feasibility of large-scale ad fraud at AppLovin’s scale, as advertisers can generally measure the incremental performance of their spend3.
  • The debate continues over whether AppLovin’s methods cross the line from aggressive industry standard to outright fraud.

Conclusion

Culper Research’s short report on AppLovin accuses the company of undisclosed business relationships, misleading AI claims, manipulative app install tactics, and policy violations. These allegations have intensified investor scrutiny and contributed to significant market volatility. However, some industry voices suggest that while AppLovin’s tactics may be aggressive, they are not necessarily unique or fraudulent by industry standards3. The situation remains fluid as investigations and debates over the company’s practices continue.

Add to follow-up

Check sources

  1. Applovin stock falls after Culper research issues scathing short report
  2. Culper Research Says Short AppLovin | MarketScreener
  3. Yes, I’ve read the Culper short report on AppLovin. | Eric Seufert
  4. Culper Research Says Short AppLovin — TradingView News
  5. AppLovin Corporation (APP) Faces Investor Scrutiny After
  6. AppLovin shares tumble as short sellers question its centerpiece AXON ad software
  7. AppLovin Stock Tumbles After Short-Seller Report Alleging ‘Scammy’ Practices
  8. https://x.com/CulperResearch/status/1894749368579658023
  9. Short seller reports on AppLovin are 'poorly reasoned'

This note is an addition to my original post about an hour ago.
My personal response to this report is to just write it off as I did the previous short reports. At about 25% of my portfolio APP is my largest position. Generally, I will not allow a position to be greater than 20%, but I’ve made an exception for this exceptional company.

26 Likes

So far the market is not punishing it too much in the light of yet another short report. APP successfully managed to quell the concerns of the other 3 (or is it 4) short reports earlier this year. It seems many can’t believe quite how good APPs numbers are.
I haven’t read this new report, but I expect Adam and team to combat it as before. I dont intend to do anything with my holding. It remains a 24% holding for me behind Nebius at 29%.

Jonathan

10 Likes

Culper, Fuzzy Panda and Muddy Waters all seem to be the same group using different names. They seem to believe if you cry “fire” in a crowded theatre often enough that a fire will eventually manifest.

13 Likes

My off the cuff thoughts on each bullet:

  • Undisclosed Agency Agreements: . I am not sure why this would be a big problem unless some Chinese ad tech made its way into the American APP plug in and thus into American apps. Exploring cross-border opportunities might lead to more APP growth but special care in the security aspects must be in place.
  • Misleading Use of AI (AXON 2.0): I would expect APP to do whatever works for matching ad placement. AI would be the easiest and most effective and is their SOP.
  • Backdoor App Installs: This would most likely be controlled by the application developer. It doesn’t seem like APP would do this to the developer without full disclosure.
  • Copying Meta’s Data and Practices: I believe the CEO already answered this challenge and this is just a rehash.
  • Violations of Platform Policies: Google and Apple police their app stores very aggressively regarding app store policies, user data and ad targeting. These guys have a big hammer and do not hesitate to use it. Seems unlikely they are asleep at the wheel.

-zane

15 Likes

This is the second short report by Culper Research as the first one was back in February. I was confused at first because reading one of the stories it says the stock was down 15% on their report, but then I noticed the date is back in February.

It’s frustrating to see the main stream financial media automatically treat these reports as legitimate every single time. There is zero accountability for the media boosting these obviously falsified claims about AppLovin (and other companies). Any single person can throw up a website overnight and create one of these reports with a new name behind their “research firm”. It seems there are some investors who simply cannot accept this company is successful. AppLovin makes a juicy target because they getting to be a large cap now.

34 Likes

@wpr101 I couldn’t agree with you more. You would think that people wouldn’t swallow this crap any more, but that would require a bit of rational thought. Unfortunately, there are a ton of “investors” who are primarily driven by knee jerk reaction to news associated with their positions.

I took a look at Culper’s website. They have a very long disclaimer, well over 500 words. In a nutshell they absolve themselves from any financial loss you might suffer from actions you take based on anything they’ve published. They’ve been around for a while, the organization was formed in 2019. Seems like a really sleazy way to make a living. Though I admit I didn’t really look at the other reports they’ve published. I imagine some of them are legit.

AppLovin is a perfect target for a short report. Their growth has been spectacular. The numbers they put up challenge credulity. AI is still quite mysterious for most folks. You can see it in the comments on SA that get posted on AppLovin articles, especially ones that recommend buying. It’s a meme stock. It’s a house of cards. it will crash and burn. And so forth, the commentary is just unsupported assertions. Oh well . . .

18 Likes

I remain long APP, but trimmed my position by 50% last week, not because of short reports but because of slumping revenue growth numbers.
Last qtr - 8%
Avg last two qtrs 7%
Avg qtrly yoy 10%
Projected qtrly avg for next yr 7%

The story remains strong, but growth data presents some risk.

Gray

8 Likes

The last Q was up 40% YoY and 8.1% sequentially. The Q before that was up 44% YoY and 14.6% sequentially. Even the 8.1% sequential this past Q annualises to over 36% YoY, but I expect them to beat this by the end of the FY.

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For those impacted or simply concerned about the frequent short reports on AppLovin you will most likely find the linked blog entry of interest.

The blog is on AppLovin’s website. The article was authored by Adam Foroughi, AppLovin’s CEO. It was published in March of this year. In brief, Adam seeks to explain how AppLovin conducts business and what data they use, as well as some of the data they don’t use (obviously, it would be impossible to discuss all the data they don’t use).

21 Likes

APP has been falling down but on average volume for last few days. There is not much news except some insider selling . Wondering if there is any other pertinent news for this slide.
-Rajesh

5 Likes

I left CRDO and kept ALAB, unfortunately. I questioned the difference in stock performance and here is one response, which the metrics support.

Gray

CRDO

  • Benefiting from AI-driven demand in data centers, with its Active Electrical Cables (AECs) and Optical DSPs gaining strong traction
  • Q4 FY 2025 revenues surged ~180% YoY to $436.8 M, with AECs posting double-digit sequential growth, signaling rising adoption
  • Management issued upbeat guidance, projecting ~85% revenue growth in FY 2026 and net margins approaching 40%
  • Momentum is robust—CRDO surged ~50% in the past month and is still trading below its 52‑week high

ALAB

  • Also growing fast: Q4 revenue up ~179% YoY .
  • Yet margins and capital returns are lagging—ALAB’s ROIC is negative (‑4.3%) and ROE is 4.4%, trailing CRDO
  • ALAB is viewed as a longer‑term play, with slower analyst revisions and less immediate momentum.
8 Likes

@Graydrake Not that your post is inaccurate, it’s just not relevant. This is a thread about APP. Maybe you meant to post it elsewhere?

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Sorry, I had just completed an assessment of ALAB and CRDO, and misread the ticker in the prior post. Gray

1 Like