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.
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.
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%.
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.
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.
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.
@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 . . .
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.
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.
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).
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