The short seller apologized to AppLovin for the negative report. Shares jumped 13%

Shares of AppLovin, a developer of advertising solutions for games, jumped 13% in trading on Feb. 9, and added about 5% more in extended trading. The momentum for the stock came from shortseller CapitalWatch, which issued a public apology and retracted part of its short-selling report. Earlier, short-sellers accused one of the company's largest shareholders of involvement in financial crimes.

CapitalWatch has admitted that it made baseless allegations against shareholder Hao Tan last month. Shorts wrote that Tan had ties to crime syndicates. In an apology, CapitalWatch acknowledged that it had "mistakenly linked" the Bordeaux court ruling to Hao Tan's name.

"The descriptions [...] were inaccurate and did not meet our editorial standards," CapitalWatch said in a post on platform X published Sunday "Given the factual discrepancies - and to prevent the spread of inaccurate information and protect the legal rights of those involved - we have decided to remove and retract all snippets relating to Mr. Tan personally.

The original version of the report, titled "AppLovin's facade of compliance crumbles: Lies, money laundering and phantom structures," was still available on CapitalWatch's website at the time this story was published. Despite promising to remove portions of the report, CapitalWatch states that its position on AppLovin's financial matters remains unchanged and that the short-seller will continue to publish stories about AppLovin's misconduct.

AppLovin demanded that the "defamatory and unsubstantiated" material be removed, sending CapitalWatch a formal notice demanding that it stop distributing the report. Immediately after receiving the notice, CapitalWatch claimed in X that "the investigation was conducted over a six-month period, based on documentary sources and multiple testimonies."

AppLovin has already been criticized by other short-sellers, including Muddy Waters, Fuzzy Panda and Culper Research. AppLovin CEO Adam Forougie wrote on the company's blog in March that the short-sellers' reports were "rife with inaccuracies" and denied the allegations. And in October, Bloomberg sources reported that the U.S. Securities and Exchange Commission (SEC) was investigating AppLovin's practice of collecting users' personal data to better adjust mobile ad targeting.

Since the beginning of the year, AppLovin stock has lost 31% of its value, but over the past 12 months, it's up nearly 23%. According to MarketWatch, 28 out of 32 analysts tracking the company's stock advise buying the stock, three maintain a Neutral (Hold) stance, and only one advises selling. The Wall Street consensus price target is $406.7, which implies the stock is down another 11%.

This article was AI-translated and verified by a human editor