Deep|APP: How E-commerce Advertisers View the Short Report
Advertisers Care More About ROI
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We have been tracking Applovin for a long time.
From our earliest discussions about how Applovin deepens its moat through Mediation, Adjust, and META data transmit.
Then Applovin's e-commerce opportunities,
Next is our highly accurate forecast of Applovin's quarterly performance.
Our response to Applovin's short reports.
In fact, before the short reports emerged, we had already discussed how Applovin uses Mediation, Adjust, and META data transmit - many of these points were later distorted and exaggerated by short sellers like Fuzzy Panda.
At the market bottom this month, we wrote a research article discussing how gaming advertisers view the short report. Today we're discussing how e-commerce advertisers view the short report.
Reasons for the Recent Plunge
Since our response to the Applovin short report, Applovin has rebounded 50% from its bottom, becoming the best-performing core US tech stock in this rally.
This dramatic plunge in Applovin had multiple causes, with each decline consecutively compounding to create such an exaggerated correction.
First, DOGE's defense budget cuts triggered a 10% drop in Palantir, which subsequently led to a sell-off across all momentum stocks.
This was followed by four short reports from The Bear Cave, Lauren Balik, Fuzzy Panda, and Sakura Capital.
The timing of these short reports was particularly strategic, coming right before new companies would enter the S&P 500 index, significantly reducing Applovin's chances of inclusion. In recent years, strategy funds that bet on index inclusion have grown substantially. These funds position themselves one month before index inclusion, and with the release of short reports and approaching S&P 500 adjustment date, further degrossing occurred.
The consecutive degrossing by strategy funds triggered additional degrossing from platform funds and high beta hedge funds, though the sequence may have been simultaneous rather than sequential.
Subsequently, uncertainties around Trump's tariffs, along with emerging research suggesting the advertising industry would be impacted by these tariffs, caused further declines in META, Applovin, and all ad tech companies.
During Applovin's plunge, the entire AdTech sector experienced systematic valuation derating. This included TTD, which after years of beating and raising guidance, missed and cut forecasts for the first time, halving its valuation. TTD's drop from 50x EBITDA to 20-25x EBITDA pushed down the overall AdTech sector's valuation.
SMB AdTech companies like ZETA also faced continued short selling, further reinforcing investor concerns about black box operations in the AdTech industry.
Expert Interviews Summary
Summarizing our five recent research initiatives on Applovin, we can conclude:
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