More than 20 billion US dollars in market value were wiped out at AppLovin on Wednesday after two short-seller firms accused the Silicon Valley advertising specialist of exaggerating the capabilities of its artificial intelligence and artificially inflating the reach of its network.

AppLovin shares, which had risen by almost 800 percent in 2024, temporarily plunged by 23 percent.

AppLovin resolutely rejected the allegations.

The short sellers accuse AppLovin of exaggerating the capabilities of its AI-powered advertising algorithm and artificially inflating the size of its network in a non-transparent manner. Additionally, ads are said to have been specifically targeted at minors and apps installed without user consent – a practice through which the company generates commissions.

Foroughi rejects this: "We do not collect data from children. Our partners invest billions in our system because we demonstrably provide them with real and increasing advertising revenues.

The stock was able to recover slightly after heavy losses in early trading and was quoted in the afternoon at around 327 US dollars, after having reached an all-time high of 510 dollars in mid-February.