AppLovin is a California-based adtech platform focused on mobile gaming apps that went public in 2021 and benefited from elevated online gaming interest during the Covid era. The company built a position in the crowded digital ad market and competes with hyperscalers by offering AI-driven ad technology that aims to improve advertiser targeting. Short-seller Culper Research accused AppLovin of promoting Axon 2.0 as hype and hiding other business drivers, while the CEO called those claims inaccurate. AppLovin reported Q2 net income of $820 million and revenue of $1.26 billion, both beating expectations and reflecting substantial growth.
In February, Culper Research revealed a short position in AppLovin, saying its surge last year was driven by investor enthusiasm for Axon 2.0, an ad-search engine. Short sale means betting a security's price will decline. "AppLovin has used Axon 2.0 largely as a promotional tool - a smokescreen to hide the true drivers of its mobile gaming and e-commerce initiatives, neither of which have much to do with AI," the firm wrote.
After the short reports, CEO Adam Foroughi defended the company's technology in a blog, calling the reports "littered with inaccuracies and false assertions." "A few nefarious short-sellers are making false and misleading claims aimed at undermining our success, and driving down our stock price for their own financial gain," he wrote. Despite the skepticism, AppLovin shares are up nearly 50% year to date.
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