Why AppLovin Stock Was Falling Today
Key Points
CapitalWatch accused AppLovin of being part of a money-laundering network.
Management said the accusation was baseless.
AppLovin has been a popular target of short sellers.
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Shares of AppLovin (NASDAQ: APP) were pulling back today after the high-flying ad-tech company got hit by another short-seller report.
This time, CapitalWatch, a financial research company, accused AppLovin of fostering a Southeast Asian money laundering network.
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The accusation came out on Monday, and the stock fell as much as 5% yesterday, but AppLovin recouped most of those losses. Today, AppLovin pushed back on the report as the stock fell 5.8%.
Image source: Getty Images.
What the short report said
CapitalWatch, which is not a well-known short-seller, said that AppLovin had become an "asset sale haven for cross-border black money," and that it had violated anti-money-laundering laws.
In a statement, AppLovin called the allegations "false, misleading, and nonsensical."
What's next for AppLovin
This is at least the fourth short report on AppLovin over the last year or so, and none of the previous ones have stuck.
AppLovin is a ripe target for short sellers in a number of ways, as the stock has soared in recent years, it trades at a lofty valuation, and its business model isn't the most straightforward.
AppLovin will have a chance to bounce back when it reports fourth-quarter earnings on Feb. 11. Analysts see revenue increasing 17.4% to $1.61 billion, which includes a headwind for the sale of its apps business, and earnings per share growing from $1.73 to $2.95.
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Jeremy Bowman has positions in AppLovin. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
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