AppLovin Stock Plunges as SEC Launches Probe Into Data Practices — But Analysts Still See Long-Term Upside

AppLovin (APP), one of the biggest players in mobile advertising technology, is under investigation by the U.S. Securities and Exchange Commission (SEC) over its data-collection practices. The news sent shares tumbling more than 14% on Monday, marking the company’s steepest one-day drop since April.

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Key Points

• The SEC is investigating AppLovin’s data-collection methods after a whistleblower complaint and short-seller reports.

• Shares plunged 14% Monday before rebounding slightly Tuesday, highlighting investor anxiety.

• Analysts like Oppenheimer remain bullish long-term, saying volatility could be temporary.

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Why Is the SEC Investigating AppLovin?

The SEC probe focuses on whether AppLovin violated agreements with major platform partners such as Meta (META), Google (GOOG), and Amazon (AMZN) to collect and use data for targeted advertising. According to sources, the agency’s cyber and emerging technologies unit is handling the review following a whistleblower complaint filed earlier this year.

Reports allege AppLovin engaged in “fingerprinting” — tracking users across apps and websites using unique device identifiers — which Apple (AAPL) and Google restrict under their platform policies. While the SEC hasn’t accused the company of wrongdoing, the investigation adds fresh uncertainty to a stock that has already seen sharp swings.

AppLovin said it regularly engages with regulators and would disclose any material developments if necessary. The SEC declined to comment due to the ongoing federal government shutdown.

How Did the Market React to the News?

AppLovin stock dropped 14% on Monday to close at $586.77, regaining 7% in early Tuesday trading.

Despite the turmoil, the company’s shares remain up over 300% in the past year, reflecting investors’ optimism about its growth in artificial intelligence-driven ad technology. The stock was recently added to the S&P 500 Index, underscoring its growing influence in the digital advertising space.

AppLovin’s rebound Tuesday, suggests traders may view the dip as an overreaction rather than a long-term threat to its fundamentals.

What Are Analysts Saying About AppLovin’s Outlook?

While the SEC probe has rattled short-term sentiment, some analysts believe the long-term investment case remains strong.
Oppenheimer’s Martin Yang noted that the investigation and related Freedom of Information Act (FOIA) requests “could add near-term volatility,” but reiterated his Outperform rating, maintaining a bullish stance.

Earlier in September, UBS and Piper Sandler raised their price targets on AppLovin to $810 and $740, respectively, citing strong momentum from its upcoming “Axon Ads Manager” platform.

These analysts argue that AppLovin’s technology — which helps app developers target and monetize users — positions it as one of the top contenders in next-generation ad tech, even amid regulatory uncertainty.

What It Means for Investors

AppLovin’s SEC investigation is a red flag in the near term, especially as digital advertising faces tighter scrutiny around data privacy. However, if no major violations emerge, the company could quickly regain investor confidence given its strong fundamentals and market leadership.

The recent selloff may attract investors seeking opportunities in high-growth tech stocks at discounted prices. Still, volatility is likely until the scope of the SEC’s findings becomes clearer.

Conclusion

AppLovin’s rapid rise in valuation — nearly doubling this year — has drawn both investor enthusiasm and regulatory attention. The SEC probe may cloud sentiment for now, but unless the findings reveal serious compliance breaches, the long-term growth story remains intact. Investors should brace for turbulence but watch closely for updates from both the company and regulators in the coming weeks.

FAQs

Is the SEC investigation into AppLovin confirmed?
Yes. Multiple reports confirm that the SEC is examining AppLovin’s data-collection practices following a whistleblower complaint. However, the company has not been accused of wrongdoing, and the scope of the review remains unclear.

Why did AppLovin stock drop so sharply?
The stock fell 14% after news broke of the SEC probe, as investors reacted to the potential for regulatory penalties or business disruptions. Given the company’s prior rapid rally, the pullback reflects heightened risk sensitivity.

Is AppLovin still a good investment?
Analysts remain divided. Some, like Oppenheimer, see the selloff as temporary and maintain bullish long-term views. Others warn that ongoing scrutiny of data privacy could pressure future growth and valuation.

What are AppLovin’s major partners?
AppLovin works with major digital platforms including Meta, Google, Amazon, and Apple. Its ad-technology tools help app developers target users and optimize ad placements across devices.

What happens next for AppLovin?
Investors will watch for updates from the SEC and management’s response. Any formal findings or disclosures could determine whether the recent volatility is a short-term setback or a deeper concern.

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