What Happened?

Shares of mobile app advertising platform AppLovin (NASDAQ: APP) fell 14.9% in the afternoon session after short-seller Muddy Waters revealed a short position in the company and issued a report that raised concerns about APP's ad targeting methods and competitive strengths. This report aligned with concerns raised by Culpers Research and Fuzzy Panda earlier in the year.

The shares closed the day at $261.69, down 20.1% from previous close.

The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy AppLovin? Access our full analysis report here, it’s free.

What The Market Is Telling Us

AppLovin’s shares are extremely volatile and have had 46 moves greater than 5% over the last year. But moves this big are rare even for AppLovin and indicate this news significantly impacted the market’s perception of the business.

The previous big move we wrote about was 17 days ago when the stock dropped 11% on the news that markets tumbled, extending the weakness from the previous week as concerns over the ongoing trade war continued to spread. Over the weekend, President Trump fielded questions regarding recession worries on FOX News, calling the market struggle "a period of transition," but that didn't do much to calm investors. The sell-off was particularly pronounced in the tech sector, with the Nasdaq falling 3% into correction territory, while the S&P 500 also posted a 2% decline. 

Separately, the company wasn't included in the list of stocks to be added to the S&P 500 which was released on March 7, 2025. Being included in the index means that the stock will likely be held by many mutual funds and ETFs, which could potentially drive up demand for the stock.

AppLovin is down 22.8% since the beginning of the year, and at $263.95 per share, it is trading 48.3% below its 52-week high of $510.13 from February 2025. Investors who bought $1,000 worth of AppLovin’s shares at the IPO in April 2021 would now be looking at an investment worth $4,048.

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