AppLovin Stock Plunges 20% on Fake Ads Report, Google Drops 2%

AppLovin’s Sharp Decline Amid Fraud Allegations

AppLovin (APP) saw its stock surge from $380 to $525.15 in early February following a strong Q4 2024 earnings report. However, the stock has since lost nearly half its value, with today’s 20% plunge wiping out $65 per share, bringing it below $262 by the close of the US session.

Applovin Stock Chart Daily – back to the 200 SMA

While the stock had shown a recovery in March after a February pullback, today’s sharp decline follows a damning report from short-seller Muddy Waters. The report raises serious concerns about AppLovin’s business practices, suggesting that its advertising platform could face deplatforming if the allegations hold true.

Fraud Concerns and Questionable Growth

Muddy Waters’ research suggests that AppLovin relies excessively on retargeting in its e-commerce operations, a practice that may not provide real value and could violate major digital advertising platforms’ terms of service. Their analysis indicates that retargeting accounts for around52% of AppLovin’s e-commerce sales,  yet only 25-35% of those transactions come from new customers. This raises doubts about the sustainability of the company’s revenue growth.

Additionally, the report accuses AppLovin of collecting and structuring user IDs from major advertising platforms, a practice that, if proven, could be a serious violation of platform policies and lead to potential penalties or restrictions.

Google Shares Face Renewed Selling Pressure

Meanwhile, Google (GOOG) has been under persistent selling pressure since early February, falling 25% from its peak of $206.69 to a low of $156.72 last week. However, buyers stepped in at the key 200-day simple moving average (SMA), leading to a slight recovery earlier this week as sentiment toward tech stocks improved.

That optimism has now faded, and Google’s stock has lost 5% over the past two days, including today’s 2% decline. The stock is once again approaching the critical 200-day SMA, which remains a crucial support level. A break below this threshold could signal further downside momentum for Google.

Conclusion

AppLovin’s sharp decline highlights the risks associated with companies heavily reliant on digital advertising, especially when questions arise about their business practices. If Muddy Waters’ claims gain traction, the stock could face even more downside. Meanwhile, Google’s stock remains at a pivotal level, with sellers eyeing a potential breakdown below the 200-day SMA. Both stocks will likely remain volatile in the coming sessions as investors react to the unfolding developments.