Shares of AppLovin Corp. plunged as much as 18% on Monday after the mobile-app marketing and advertising platform disclosed a Securities and Exchange commission examination into its data-collection practices. The stock, previously a standout performer this year, experienced its steepest intraday decline since February.
AppLovin’s dramatic fall underscores the heightened regulatory scrutiny facing companies involved in digital advertising and user data. The SEC probe, alongside previously reported investigations into other ad-tech firms, raises concerns about compliance with privacy regulations and the handling of consumer information. The company stated it is indeed cooperating fully with the SEC, but the investigation introduces uncertainty for investors and could potentially lead to financial penalties or operational changes.
AppLovin had been one of the year’s hottest stocks, surging over 30% prior to Monday’s selloff, fueled by optimism surrounding its growth in the mobile gaming market and its innovative advertising technologies. The company’s platform helps app developers market their games and applications, and it generates revenue through advertising sales.
According to a regulatory filing, the SEC is investigating whether AppLovin made adequate disclosures regarding its data practices. The probe centers on how AppLovin collects, uses, and shares user data, and whether its practices comply with applicable laws and regulations. The company acknowledged receiving a subpoena from the SEC in October 2024 related to the matter.
AppLovin stated it believes its data practices are compliant with relevant laws, but the outcome of the investigation remains uncertain. The company’s shares closed down 16.7% at $21.88 on Monday, wiping out a significant portion of its year-to-date gains.