AppLovin Faces Money-Laundering Claims-Here's What's Missing

For advertising technology stock AppLovin (NASDAQ: APP), short reports have become a noteworthy theme. Critical reports from Fuzzy Panda Research and Culper Research were released early in 2025, leading AppLovin shares to fall over 12% on Feb. 26, 2025. On Mar. 27, a month later, research firm Muddy Waters issued another report, leading AppLovin shares to tank over 20%.

A short report is a critical research note published by an investor who is betting the stock will fall. Depsite so many reports in recent months, markets and Wall Street analysts alike have generally swept these concerns under the rug. AppLovin rose approximately 108% in 2025, with the company delivering multiple strong earnings reports that drove shares higher. Additionally, AppLovin price targets now come in as high as $860, massively above targets in the $450 range from early 2025.

AppLovin now faces another sell-off at the beginning of 2026, due to a short report from CapitalWatch that led AppLovin shares to fall almost 6% on Jan. 21. Let’s break down what short sellers are alleging, and gain an updated outlook on AppLovin. 

CapitalWatch Claims APP Involvement in Money Laundering Scheme

CapitalWatch has made serious accusations against AppLovin, with its central claim being that two of AppLovin’s largest shareholders, Hao Tang and Ling Tang, are using the company’s business to launder money.

AppLovin acts as an auctioneer for companies looking to buy and sell advertising space, taking a fee after facilitating the deal.

For example, one company might pay $1,000 to advertise. After AppLovin takes a percentage, like 25%, the company offering advertising space receives $750. 

CapitalWatch argues that the Tangs control a network of companies on both sides of these transactions, with AppLovin in the middle, and that by pushing these funds through AppLovin, they are laundering money gained from illegal activites.

AppLovin Categorically Denies CapitalWatch Claims

AppLovin responded to CapitalWatch’s report in emailed statements to various media outlets. The company said that the report is “rife with false, misleading, and nonsensical allegations,” calling claims that it facilitated money laundering “patently false”. AppLovin has sent CapitalWatch a cease-and-desist letter, stating the company’s claims are “conspiratorial”.

CapitalWatch’s report made many associations aimed at linking AppLovin’s business to a vast crime network in Asia. However, the report lacks primary evidence. CapitalWatch did not provide documents, contracts, invoices, or bank records that clearly show money moving between allegedly illicit companies and AppLovin.

It is important to note that companies releasing short reports can have a vested interest in seeing AppLovin shares decline. By taking short positions in the stock and then releasing a damaging report, they can profit as markets sell off. AppLovin saw sharp downward moves after short reports in 2025, showing that the ability to generate significant gains through this strategy is real.

Bloomberg reported back in October of last year that the SEC is investigating AppLovin. The SEC has not officially confirmed this or accused AppLovin of any wrongdoing. Also, the alleged investigation was not centered around money laundering claims. Instead, it was concerned with AppLovin’s data collection practices and whether the company violated agreements with app store operators like Apple (NASDAQ: AAPL). Since Bloomberg’s initial reporting, there have been no updates on this matter.

Analysts Eye Big Gains Despite Accusations Against APP

AppLovin faces notable regulatory, reputational, and legal risks. Still, claims made by short-sellers appear to have garnered relatively little traction with investors and regulators. Further developments in regulatory investigations, as well as class action litigation involving AppLovin, will be key risk factors to watch going forward.

AppLovin shares hit a 52-week closing high near $734 on Dec. 22. As of the Jan. 27 close, shares have fallen to around $544, marking a steep 26% decline.

Wall Street analysts see considerable upside in shares amid this drop. Analysts at Needham and Company issued a $700 price target on Jan. 26, several days after the CapitalWatch report. The consensus price target on AppLovin sits at around $706, implying 30% upside.

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The article "AppLovin Faces Money-Laundering Claims—Here’s What’s Missing" first appeared on MarketBeat.