Why AppLovin Stock Is Plummeting Today

AppLovin (NASDAQ: APP) stock is getting hit with big sell-offs in Wednesday's trading. The company's share price was down 16.1% as of 2:40 p.m. ET and had been down as much as 23.4% earlier in the daily session.

AppLovin's valuation is trending lower today following new bearish reports on the company. Fuzzy Panda and Culper Research both published short-seller reports on the stock today and questioned the company's growth outlook and valuation profile.

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AppLovin stock sinks on short-seller reports

AppLovin stock is under pressure today amid bearish outlooks from two short-sellers. Fuzzy Panda recently published a negative report on the company, stating that they believed that the business's rapid growth was built on a house of cards and relied on violating policies on Alphabet's and Apple's respective app stores. Culper Research raised similar concerns and stated that it believed the company's recent success in the mobile gaming space was tied to the exploitation of app permissions on mobile devices.

What's next for AppLovin?

While AppLovin is seeing a big valuation pullback in conjunction with bearish coverage, some sources think the sell-off is overdone. Wedbush published a report on the stock this morning, stating that it believed that the recent short reports were misguided. Wedbush thinks that it's highly unlikely that AppLovin has been violating data and advertising policies on major mobile stores without legal pushback from the operators or other big players in the digital marketing space.

Despite recent pullbacks, AppLovin stock is still up roughly 448% over the last year of trading. Given the company's growth-dependent valuation and widely differing opinions on the business's performance outlook, it's likely that the stock will continue to see volatile moves in the near term.

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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, AppLovin, and Apple. The Motley Fool has a disclosure policy.