On February 26, two short sellers, Fuzzy Panda and Culper Research, published short reports against AppLovin Corporation, stating that it is misrepresenting the benefits of its AI advertising platform. In response, AppLovin (APP) CEO Adam Foroughi expressed his disappointment in a company blog, writing how these so-called claims are “false and misleading”, and aim to undermine AppLovin’s success and drive down its stock price for their financial gain.

Applovin CEO Adam Foroughi’s blog:

To our Shareholders, Partners, and Team,

I’m writing this mid-quarter update to address the recent short reports published about our company. It’s disappointing that 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, rather than acknowledging the sophisticated AI models our team has built to enhance advertising for our partners.

While the reports are littered with inaccuracies and false assertions, and we won’t comment on every point, it’s important to correct the record around a few foundational issues:

Compliance and Integrity:

Our platform is subject to App Store policies.  All of the games we promote are also apps published in the App Store, therefore, they all have to comply with App Store policies. Our business is based on transparency and integrity. Our partners spend billions annually because we drive real, incremental value in the form of revenue directly attributable to advertising dollars spent—proving that our business model is both legitimate and profitable for partners.

Consumer Experience:

We earn revenue based on the value we drive—not on clicks or mere impressions. Our advertisements are designed to generate real engagement and revenue for our advertisers. Every download results from an explicit user choice—whether via the App Store or our Direct Download experience. Our economic model demands that ads lead to genuine, high-intent engagement, ensuring our campaigns deliver meaningful, measurable results. As part of our platform enforcement efforts, we deploy overlapping policy requirements and technical measures to help ensure the quality of the ads served through our platform.

Data Practices:

We do not track children’s data. Our terms and policies explicitly prohibit apps exclusively designed for and/or exclusively directed to children, partners from providing us with children’s data, and partners from initializing our SDK in connection with children’s data. Additionally, we obtain data from our partners solely in the context of providing them with advertising services; we do not work separately with data brokers. Adjust and MAX operations are entirely independent and transparent, with no conflicts or house bias. We run a fair mediation process that can be contractually audited by our partners, ensuring that all data accessed by us is equally available to competing ad networks. We also do not have any means or desire to look at other company’s bid or user data; our models use solely behavioral data, ad engagement data, win/loss notifications from mediation (same data shared to any bidder on our platform), and advertiser data to generate predictions. 

Financial Transparency:

The claims of financial and accounting improprieties are factually incorrect and have no basis whatsoever. We do not have any duplication of revenue from related parties, including our international entities or Apps businesses. We are a public company audited by a Big Four accounting firm and have never received a modified opinion in our history. We report net revenue with high margins and efficiently drive cash flow. Our low tax burden is due to stock-based compensation deductions and intelligent tax structuring, similar to many tech companies. Our numerous subsidiaries—mainly from our gaming operations—will be simplified following our recently announced sale of the studios.

E-commerce Pilot:

Our e-commerce pilot is performing exceptionally well. The current requirement for a minimum monthly media spend is designed to justify the resources needed for manual onboarding. We plan to expand our self-service tools and gradually lift these requirements over the year. To highlight our success, in December, we reached a run rate of roughly $1 billion a year of gross advertiser spend in the e-commerce category alone from around 600 customers. The growth potential in the coming years is substantial. Moreover, the speed of this growth clearly demonstrates the legitimacy and effectiveness of our platform.

It’s also noteworthy that the short reports emerged after our earnings report, where we would be in a period of being unable to respond with financial performance. We remain focused on executing our strategy, generating strong cash flow, and conducting share buybacks. 

Thank you for your continued trust and support.