Prime Highlights:
Fuzzy Panda Research urges the S&P 500 Index Committee to exclude AppLovin from the benchmark index due to alleged fraudulent practices.
The short-seller firm claims AppLovin violated Google and Apple policies, accusing it of data theft and tracking children’s devices.
Key Background:
Fuzzy Panda Research, a short-seller firm, has formally urged the S&P 500 Index Committee to exclude AppLovin from the prestigious benchmark index. In a letter sent to the committee on March 4, Fuzzy Panda cited serious allegations against the company, including claims of fraudulent practices within its ad-tech business. AppLovin, known for its mobile app-based advertising technology, has recently faced accusations of violating policies set by major platforms such as Google and Apple, particularly in its ad targeting methods.
AppLovin’s stock price saw an impressive surge of more than 700% in 2024, boosting its market capitalization to over $110 billion. This growth made the company a potential candidate for inclusion in the S&P 500 during the December rebalancing. However, the stock was excluded, leading to a subsequent 15% decline in its value. In contrast, Workday, a cloud software vendor, was added to the index despite having a lower market cap.
Fuzzy Panda’s critique stems from concerns that AppLovin’s rapid stock price increase may be linked to improper business practices. The firm claims that the company has been involved in data theft and revenue fraud, particularly in its dealings with Meta and its e-commerce efforts. Fuzzy Panda further alleges that AppLovin’s ad technology breaches privacy regulations, including tracking children’s devices in violation of Apple’s and Google’s app store policies.
Despite these claims, AppLovin CEO Adam Foroughi vehemently denied the allegations, calling them misleading and false. He argued that the reports from Fuzzy Panda and other short-sellers were designed to manipulate the stock price for financial gain rather than reflect the company’s actual business operations. Industry analysts have largely dismissed Fuzzy Panda’s accusations, with some reiterating their buy recommendations for AppLovin’s stock, asserting that its growth is grounded in legitimate and sophisticated AI-powered advertising solutions. As the S&P 500 prepares for its next quarterly rebalancing in March, the future of AppLovin’s inclusion remains uncertain, with the company’s stock price continuing to experience volatility amidst ongoing scrutiny.
