AppLovin (APP) shares closed 20% lower on Thursday after short-seller Muddy Waters alleged that the company's e-commerce conversion practices represented potential violations of platform terms of service.
About 52% of AppLovin e-commerce conversions come from retargeting, with only 25%-35% deemed incremental, according to a report issued by Muddy Waters on Thursday.
The short-seller alleged that AppLovin is collecting and structuring user IDs from key platform partners, which it said "appears to be" a violation of terms of service.
"APP's advertising clients are likely sensitive to actual incrementality, which should frustrate APP's growth plans," Muddy Waters said.
AppLovin did not immediately respond to an MT Newswires request to comment.
AppLovin shares were more than 7% higher in premarket trading on Friday.
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