Who's Crushing AppLovin? Short-Seller Conspiracy or Bad-Timed Coincidence?
The market braces for a new era of short attacks—coordinated reports, anonymous players, and billions at stake
AppLovin, a leading developer of mobile apps, was riding high after delivering a blowout earnings report—a milestone widely anticipated as a precursor to the company’s inclusion in the prestigious S&P 500 index. But instead of celebration, things took an ugly turn.
In the days following its stellar earnings results, AppLovin found itself facing an unprecedented short-selling attack. Short sellers emerged in force, publicly questioning the company’s business model, transparency, and long-term sustainability. The coordinated timing of this assault raised eyebrows, fueling speculation: Was this purely a market-driven reaction, or was there something more calculated at play?
On Feb. 12, AppLovin delivered strong Q4 earnings, with revenue soaring 43% year-over-year to $953.3 million. When a company counts revenue in billions, it’s hardly a red flag. Net income more than tripled to $599.2 million ($1.73 per share), compared to $172.3 million (51 cents per share) a year earlier. The stock jumped 30%, with analysts raising their estimates even higher.
Feb. 20 was supposed to be another strong day—if we can talk about the market in such terms. Loop Capital raised its price target from $450 to $650. On the same day, short-seller Edwin Dorsey, who runs The Bear Cave with 93,000 Substack subscribers, published a report claiming AppLovin’s 750% stock surge over the last year was fueled by “low-quality revenue growth from ads that are deceptive, predatory, and at times unreadable or unclickable.”
Dorsey’s Bear Cave is not a typical short-seller operation—he acts more like an investigative journalist, exposing companies with questionable market practices. He played a key role in exposing Care.com in a highly publicized case and highlighted Chegg’s struggles as it lost market share to ChatGPT, along with other corporate shake-ups. However, none of his previous targets had a $150 billion market cap.
AppLovin dropped 15% in two days, falling from $488 to $415, but the real trouble was only beginning.
On Feb. 26, two anonymous short-sellers, Fuzzy Panda and Culper Research, released reports on AppLovin simultaneously. The scale of this attack was unprecedented, sending the stock down 22% before the company refuted the allegations. I can’t recall another case where three short-sellers targeted a single major company at the same time. The closest parallel? Fuzzy Panda and The Bear Cave’s attack on Global Life, which wiped out half its market cap in a single day. It took nearly a year for the stock to recover.
If these firms attack in sync, how can this be a coincidence? Who really owns these short-sellers? That’s a tough question to answer, but S&P 500 inclusion is a big deal—it forces index funds to pour billions into a stock. And yet, on March 1, AppLovin was left out. Instead, companies with lower market caps took those coveted spots:
TKO Group – $24B market cap
DoorDash – $73B market cap
Williams-Sonoma Inc. – $23B market cap
AppLovin lost another 5% after this announcement and is now down nearly 50% from its peak, even as analysts reaffirm $600–650 price targets.
Are we seeing a new blueprint for using short-sellers to keep competitors out of the S&P 500? I’m not calling anyone out directly, and yes, I hold a position in AppLovin, but I don’t believe in coincidences.
Fuzzy Panda even wrote a letter to the S&P 500 committee, accusing AppLovin of using fraudulent tactics to bolster its ad business. CNBC amplified this report, adding even more pressure.
Would AppLovin have fallen anyway due to broader market weakness? Possibly. But the company posted great earnings and strong guidance—in an industry that thrives even in downturns. Mobile applications remain in high demand.
One challenge for AppLovin is how it communicates with investors. Unlike Palantir, which has a vocal retail investor base defending it, AppLovin lacks that kind of support.
Perhaps S&P 500 inclusion was never the real issue—just a smokescreen. Someone wants AppLovin stock at a “fair price,” and when you tip off short-sellers while betting on market weakness, you can crush even a $150 billion giant.
We’ve seen companies fight off short-sellers before. Hindenburg Research shut down after targeting SMCI, Roblox, and Adani—all of which rebounded. But now, a new strategy is emerging: multiple short-sellers launching coordinated attacks, amplifying each other’s narratives in rapid succession.
We’ll see more of this. The stock market is a reflection of politics, and it’s getting harder and harder to navigate. Companies like AppLovin need to become more transparent and proactive—because, as we’re learning, public companies can no longer afford to go silent until earnings day.
This publication is for educational and informational purposes only and does not constitute financial, investment, or trading advice. Readers are solely responsible for their own investment decisions. The author may hold positions in the securities mentioned.
Crazy! While it is legitimate to question a company’s business model or criticize certain practices, making allegations as Fuzzy Panda did against EOSE— in case it’s without evidence—would be criminal in my view. Unless their statements are fully substantiated, such actions should have legal consequences, since this goes beyond protected free speech. As I am not familiar with the exact wording of their accusations, it is possible they formulated them to be legally compliant.
Regardless of one’s opinion, the damage has been done. Not all stocks recover from such events. Last year, I was invested in MSTR while shares were around $450 / 470. Following Citron’s report, the stock dropped and is still trading about 40% below that level.
Really interesting breakdown. The scale and timing of the short-seller reports does feel unusual, and your point about the need for stronger investor communication is spot on.