AppLovin Corp (NASDAQ:APP) shares are trading higher on Tuesday, bouncing back from a steep sell-off on Monday following reports of an SEC investigation into the company’s data-collection practices.
What To Know: AppLovin shares tumbled 14% in Monday trading after Bloomberg reported the U.S. Securities and Exchange Commission (SEC) has been reviewing claims that the company breached service agreements with platform partners by using data for more aggressive ad targeting.
The stock remained suppressed in premarket trading on Tuesday before recovering some of its losses during Tuesday’s regular session. AppLovin shares were trading approximately 8% higher at last check, per Benzinga Pro.
According to Bloomberg, the SEC’s cyber and emerging tech enforcement division has been examining the matter following a whistleblower tip from earlier this year, along with several reports from short sellers in recent months. The investigation focuses on whether AppLovin engaged in unauthorized user tracking across multiple websites and apps for advertising purposes.
Short-seller reports from Fuzzy Panda and Muddy Waters earlier this year claimed AppLovin exploited its market position to improperly collect device identifiers from other platforms, enabling cross-site user tracking for ad retargeting. This technique, called fingerprinting, violates Apple’s App Store policies and was in violation of Google’s rules until February.
AppLovin CEO Adam Foroughi previously denied the allegations, stating in a March blog post that the short reports were “littered with inaccuracies,” denying the creation of device fingerprints. The company also hired prominent attorney Alex Spiro to conduct an independent investigation into the short-seller activity.
SEC probes don’t always result in enforcement actions but can lead to fines if violations are found. Investors appear to be weighing the threat of the SEC probe against the stock’s sharp sell-off on Monday, leading to a relief bounce in shares.
APP Price Action: AppLovin shares are up 8.02% at $634.09 at the time of publication on Tuesday, as seen on Benzinga Pro.
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