AppLovin Corp. captured the attention of retail investors on Monday after a short-seller report accused one of its major shareholders of money laundering, with recent stock price declines and analyst remarks further dampening investor sentiment.

AppLovin shares slumped 5% in overnight trading.

Late Monday, Capitalwatch, a U.S. financial news site specializing in Chinese companies listed on American exchanges, published a detailed report alleging that AppLovin's primary shareholders, Hao Tang and his sister Ling Tang, utilized the company to launder billions in illicit funds.

The report described a "Mobius Loop," where criminal organizations purportedly paid AppLovin substantial sums for advertising via its AXON algorithm and Array software to clean illegal cash. It also claimed that, despite management's denials, AppLovin operates a shadow team of over 15 people in mainland China handling sensitive U.S. user data, potentially triggering action from the U.S. Department of Justice and a national security review.

It is worth noting that AppLovin has previously faced accusations from prominent financial blogs, including Fuzzy Panda Research, Culper Research, and Muddy Waters Research, for inflating performance metrics and stealing customer data from social media, among other issues. In October, it was reported that the U.S. Securities and Exchange Commission had launched an investigation into the company's business following a whistleblower complaint.

This development follows a three-session losing streak for AppLovin shares as of Friday, resulting in a total decline of approximately 15% over that period. While U.S. markets were closed on Monday, AppLovin's Frankfurt-listed shares fell nearly 6% for the day.

Despite these allegations, the mobile advertising technology company has demonstrated strong performance. APP stock surged 108% over 2025. The company posted robust third-quarter results: revenue jumped 68% to $1.4 billion—marking its second-best quarterly growth rate in four years—while net income climbed 92% to $836 million.

In July, AppLovin finalized the $800 million sale of Tripledot Studios from mid-last year, effectively shifting its focus from owning and operating mobile games to concentrating on advertising technology. A month later, it expanded its share buyback program by an additional $3.2 billion and was added to the S&P 500 index.

AppLovin is scheduled to report its fourth-quarter results on February 11.