AppLovin Stock Crashes as SEC Probes Data-Collection Practices Following Whistleblower Complaint
San Francisco — Shares of AppLovin plunged on Monday after Bloomberg reported that the U.S. Securities and Exchange Commission (SEC) has launched an investigation into the company’s data-collection and ad-targeting practices.
According to the report, the SEC inquiry centers on whether AppLovin violated agreements related to how it pushes targeted ads to consumers, citing people familiar with the matter. The probe reportedly stems from a whistleblower complaint filed earlier this year, alongside a series of short-seller allegations accusing the company of mishandling user data.
The report emphasized that neither AppLovin nor any of its executives have been formally accused of wrongdoing.
In a statement, an AppLovin spokesperson said the company typically does not comment on ongoing or potential regulatory matters.
“That said, as a global public company, we regularly engage with regulators, and if we get inquiries, we address them in the ordinary course,” the spokesperson said. “Material developments, if any, would be disclosed through the appropriate public channels.”
The stock tumbled 14% in regular trading Monday afternoon, with losses deepening another 5% in after-hours trading following the report.
From AI-Fueled Growth to Sudden Scrutiny
The SEC probe marks a sharp turn for AppLovin, which had been one of Wall Street’s hottest tech stories. The mobile-advertising firm’s stock had soared more than 700% in 2024 and another 80% so far in 2025, propelled by its AI-driven ad-optimization platform, AXON.
AppLovin’s technology uses artificial intelligence to fine-tune ad targeting across major apps and social networks — including Meta, TikTok, Snap, and Google — enabling advertisers to reach audiences more efficiently.
But that same capability has made the company a target for short sellers and privacy watchdogs.
Short-Sellers Raise Red Flags
Three high-profile short-seller firms — Fuzzy Panda Research, Culper Research, and Muddy Waters Research — have all published reports accusing AppLovin of violating app-store terms of service and extracting proprietary user IDs from partner platforms without consent.
In a March report, Muddy Waters alleged that AppLovin’s ad practices “systematically” bypass privacy protections by pulling user identifiers from major platforms to deliver targeted ads.
AppLovin’s CEO Adam Foroughi previously dismissed the allegations as “misleading and self-serving,” claiming short sellers were attempting to manipulate the market for profit.
Despite the controversy, AppLovin was added to the S&P 500 in September, replacing MarketAxess Holdings — a move that some short sellers had actively campaigned against.
A High-Flying Stock Faces Its First Real Test
Foroughi’s aggressive defense and AppLovin’s stunning rise had made it one of Silicon Valley’s newest power players. But with the SEC now reportedly investigating, the company faces mounting questions about its data transparency, compliance posture, and long-term sustainability in a tightening regulatory environment for digital advertising.
If the SEC’s inquiry intensifies, it could mark a major inflection point for the AI-driven ad-tech industry — where innovation often collides with growing concerns over privacy and user consent.
