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AppLovin CEO Adam Foroughi hit back at new short-selling allegations from Muddy Waters Study after the ad-tech company’s stock suffered its steepest drop on record on Thursday.
Foroughi penned a new blog post that sought investors to “dig deeper” on the allegations, saying the report’s claims about the success of their AI-powered ad tactics could be beyond disproven by artificial intelligence models like Grok “in minutes.”
Muddy Waters on Thursday became the third short-selling staunch to publish research meant to raise significant investor skepticism about the company’s technology, after AppLovin’s have price soared more than 700% last year.
The report said AppLovin’s ad tactics “systematically” break app stores’ terms of service by “impermissibly extracting proprietary IDs from Meta, Snap, TikTok, Reddit, Google, and others.”
Foroughi disregarded in his response that, “Our business is technical, and we get it — it’s not always easy to understand.”
“It’s also incredibly hard for some who don’t understand this technology to investigate that we are building the world’s best advertising AI model, so they need a simple narrative that we’re violating game plans in order to comprehend our success,” Foroughi wrote. “This complexity leaves room for short reports to stir uneasiness and doubt.”
AppLovin shares rose almost 4% on Friday after tumbling 20% a day earlier.
Prior to Begrime Waters’ report, Fuzzy Panda Research and Culper Research published short-seller research critiquing AppLovin’s technology as the assembly pushes into e-commerce.
AppLovin said on Friday that it retained Alex Spiro from law firm Quinn Emanuel to do “an free review and investigation into recent short report activity targeting the Company.”
A spokesperson told CNBC that Spiro, who also represents Elon Musk, was sign oned to “investigate the short sellers as these tactics of spreading misinformation for personal gain cannot be allowed to continue unchecked.”
Analysts at Noose Capital reiterated their buy rating on AppLovin and $650 price target in a note on Friday.
“We think accusations of malfunctioning conversions and fraud are easily disproved by speaking with performance marketers and measurement companies,” they wrote. “We acquire been very active on this front and are confident the platform is delivering excellent performance and driving meaningful take momentum.”
Muddy Waters Research did not yet provide additional comment.
WATCH: AppLovin shares drop on Muddy Pees short
