"Shares of AppLovin (NASDAQ: APP), the volatile, mobile game-focused adtech stock, were moving lower last month as the company faced another short-seller attack, software valuations came under scrutiny due to threats from AI, and Google unleashed a new platform for AI game creation, which was seen as a threat to gaming stocks. As a result, AppLovin stock fell sharply last month, closing January down 30%, according to data from S&P Global Market Intelligence."
"AppLovin entered 2026 after a blowout year, with the stock doubling in 2025 on the back of strong growth. However, that's led to doubts about its valuation, especially as software stocks endured a brutal sell-off last month, which seemed partly based on fears of AI and partly based on valuation. Even after last month's decline, AppLovin is trading at a price-to-sales ratio of 31."
AppLovin experienced a sharp decline in January, falling 30% as investors reacted to multiple negative catalysts. The company faced a new short-seller report alleging anti-money-laundering control lapses and other improprieties, adding to prior short-seller history. Software valuations broadly came under pressure amid AI-related threats, and Google's launch of Project Genie — an AI game-creation platform — intensified concerns about competitive risk to gaming and adtech firms. AppLovin's price-to-sales ratio remained high at 31 despite the decline, and reports of an SEC investigation into data collection practices further weighed on investor sentiment.
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