AppLovin has hired the law firm Quinn Emanuel Urquhart & Sullivan to investigate various short seller claims, Bloomberg reports, after a Thursday report by short seller group Muddy Waters alleged that AppLovin is misleading investors by overstating its technological differentiation and financial performance.

AppLovin, which provides mobile app developers with monetization, marketing, and analytics solutions, has witnessed its stock price collapse in recent weeks in response to claims about bad business practices—such as predatory advertising schemes and the artificial inflation of revenue numbers—from short sellers including Lauren Balik, Sakura Research, Fuzzy Panda, and Culper Research. 

The Muddy Waters report—which raised concerns about AppLovin’s data practices and also alleged that more than half of AppLovin’s attributed e-commerce sales stem from retargeting rather than new customer acquisition—caused AppLovin shares to drop by about 20% Thursday afternoon.

In a blog post published Thursday, AppLovin CEO Adam Foroughi called out Muddy Water’s claims about the adtech company’s pixel functionality and ecommerce tactics. “It’s easy to discredit a short report like this in minutes,” Foroughi wrote, as he thanked partners and investors for “sticking with” the company.

Now, AppLovin will retain Alex Spiro, Quinn Emanuel Urquhart & Sullivan’s partner and co-chair of the Investigations, Government Enforcement and White Collar Defense Practice, to look into the short reports’ claims.

“Alex Spiro has been hired to investigate the short sellers[,] as these tactics of spreading misinformation for personal gain cannot be allowed to continue unchecked,” an AppLovin spokesperson told ADWEEK in a statement. 

The stock price rose on the back of the announcement Friday morning—at the time of writing, it’s trading around $278.16. It’s still a far cry from the stock’s mid-February high of around $510.13.

The firm enjoyed a hot streak through 2024 and into Q1 of 2025, with its stock spiking over 700%. It recorded 44% year-over-year revenue growth and unseated The Trade Desk to become the world’s most valuable adtech company by market cap. 

Now, the momentum appears to be slowing. 

Earlier this week, news of a class action lawsuit against AppLovin broke. Led by Levi & Korsinsky, LLP, the suit alleges securities fraud and manipulative advertising practices that artificially inflated the company’s financials between May 2023 and February 2025.