The stock of AppLovin ($APP) is down 11% after short-seller Edwin Dorsey accused the mobile technology company of committing “advertising fraud.”
Dorsey made the accusation in his “Bear Cave” substack newsletter, sending APP stock sharply lower on a day when the broader stock market is experiencing a pullback. Silicon Valley-based AppLovin is an app marketing platform that derives much of its revenue from online advertisements. The critical report arrives with APP stock up 689% over the last 12 months.
Dorsey said in his newsletter that he believes AppLovin’s rapid rise has been fueled by low-quality revenue growth from “ads that are deceptive, predatory, and at times unreadable or unclickable.” The findings are based on Bear Cave’s investigation, which involved spending dozens of hours playing mobile games in the AppLovin ecosystem.
A Bubble Burst?
Dorsey added that AppLovin is often “opaque and difficult to understand.” The bearish report had an immediate impact on APP stock, with one post on the site Stocktwits saying the short-seller report marked a “bubble burst” for the company’s shares.
AppLovin went public in April 2021 and its stock largely traded sideways until last fall when the company reported third-quarter financial results that were above analysts’ expectations thanks to a substantial increase in revenue. So far in 2025, APP stock has risen 35%.
Is APP Stock a Buy?
AppLovin stock has a consensus Strong Buy rating among 18 Wall Street analysts. That rating is based on 14 Buy and four Hold recommendations issued in the last three months. The average APP price target of $539.88 implies 22.45% upside from current levels.
