AppLovin (NASDAQ:APP) is set to close an eventful Q1 in negative territory this year as short sellers continued to slam the AdTech company, driving down its stock from the best-performing Nasdaq-100 component in 2024 to one among the worst. 

Having climbed more than 700% to become Nasdaq-100's best performer in 2024, beating out tech favorites such as Nvidia (NVDA), the Palo Alto, California-based firm continued its meteoric rise this year, boosted by a stronger-than-expected Q4 earnings report in early February.

However, several short-seller reports have unravelled the rally since then. The latest short seller to attack APP was Muddy Waters Research, which issued its report on Thursday, taking aim at the company’s digital ad technology.

AppLovin (NASDAQ:APP) shares fell ~13% this week in reaction, taking its YTD plunge to ~16% as the stock ended up among the worst-performing components in the Nasdaq-100 this year.  

Muddy Waters’ report followed several other short-seller reports from Fuzzy Panda Research and Culper Research, which also targeted the company’s digital advertising platform AXON, the main reason behind its recent financial success.

With short reports from Fuzzy Panda Research and Culper Research coming close on the heels of another report from short seller Bear Cave, CEO Adam Foroughi quickly defended the company.

“It’s also noteworthy that the short reports emerged after our earnings report, where we would be in a period of being unable to respond with financial performance,” Foroughi wrote on a blog post after multiple short reports came to light in February.

With upward revisions to its Q1 2025 revenue and earnings far exceeding the downward revisions and its stock trading ~300% higher than its year-ago levels, AppLovin’s (NASDAQ:APP) valuation will be under sharp investor scrutiny as the company welcomes a new quarter from next week.