AppLovin demands short-seller retract ‘conspiratorial’ report

AppLovin despatched a stop and desist letter to CaptialWatch Monday, claiming the short-seller’s report that the corporate “serves as a ‘digital laundromat’ for legal syndicates” is defamatory and baseless.

“Your respective ‘experiences’ include quite a few absurd and demonstrably false statements of purported truth about AppLovin,” the letter states, calling the findings “conspiratorial musings.”

The letter demanded that CapitalWatch retract its 35-page report revealed final week, in addition to follow-up statements.

CapitalWatch posted a statement on Wednesday standing by its report.

“Our protection displays a rigorous six-month investigation supported by documentary supplies and a number of sources, together with buyers, alleged victims of monetary fraud, and whistleblowers,” the agency wrote on X. “We are going to proceed reporting, together with the following installment in our collection, “9 Questions for AppLovin.”

CapitalWatch mentioned within the assertion that it isn’t a short-selling agency and referred to itself as an impartial media outlet with out a monetary curiosity in AppLovin.

In its phrases of service, the corporate mentioned it doesn’t maintain positions “within the securities of the businesses talked about in our experiences or articles.

It doesn’t specify if the corporate, associates or workers maintain positions in different shares.

CaptialWatch’s preliminary experiences allege that it uncovered “systemic compliance dangers and suspicions of main monetary crimes” throughout the ad-tech firm’s capital construction in its report.

AppLovin didn’t reply to a request for touch upon the letter.

In its report, CapitalWatch alleged that there was an in depth relationship between Hao Tang, a significant AppLovin shareholder, and Chen Zhi, who’s chairman of Cambodia-based Prince Group.

The U.S. Division of Justice charged Chen Zhi with wire fraud conspiracy and cash laundering conspiracy in October, seizing roughly $15 billion of bitcoin from his cryptocurrency wallets.

The U.S. Treasury Division named Prince Group a “Transnational Criminal Organization” on the identical day.

CapitalWatch alleged that Tang and Zhi’s ties within the Hong Kong capital market and in Southeast Asian enterprise operations “show they belong to the high-level nodes of the identical legal group.

AppLovin doesn’t work with the Prince Group, WowNow, or—to its data or perception—any associates thereof,” the corporate mentioned in its letter to CapitalWatch. “After all, you fail to establish any proof or assist to recommend in any other case.”

In 2022, Prince Financial institution, which is owned by Prince Group, partnered with WOWNOW for on-line funds. WOWNOW is Cambodia’s largest “tremendous app” that provides meals supply, ride-hailing and buying providers.

Within the letter, AppLovin informed the short-seller to protect all paperwork and communication in regards to the firm.

CapitalWatch is the most recent short-seller to lift issues about AppLovin, following essential experiences from Muddy Waters, Fuzzy Panda and Culper Research final 12 months.

In March, Fuzzy Panda urged the S&P 500 Index Committee to exclude AppLovin from the benchmark index. The short-seller’s letter reiterated earlier allegations of fraudulent advert techniques, arguing that the corporate does not meet the S&P 500’s “gold commonplace.

AppLovin CEO Adam Foroughi has denied allegations made by short-sellers previously.

“It is disappointing that a number of nefarious short-sellers are making false and deceptive claims aimed toward undermining our success, and driving down our inventory worth for their very own monetary achieve,” Foroughi wrote following experiences from Fuzzy Panda and Culper in February.

Since going public in April 2021 at about $65 per share, AppLovin’s inventory has been on a tear, now buying and selling at about $550 per share.

The inventory had a monster 2024, gaining greater than 713%.