Shares of AppLovin Corporation (APP) plummeted 9.15% in pre-market trading on Wednesday, following the release of short reports from research firms Culper Research and Fuzzy Panda Research. The short sellers alleged issues with AppLovin's business model and operations, sparking investor concerns.
Culper Research and Fuzzy Panda Research both published brief statements stating they are taking short positions on AppLovin stock. While specific details were limited, the announcements suggest the firms have identified potential problems or overvaluations with the mobile app technology company.
Broader market sentiment also appeared to weigh on AppLovin and other popular "momentum" stocks. Analysts have warned that a sell-off could occur in shares that have seen massive gains driven by leveraged positioning from retail traders. As certain high-flying names face headwinds, a reduction in risk exposure could spread more widely.
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