AppLovin Stock Experiences Volatility Amid SEC Probe, Analyst Optimism

AppLovin Corporation (APP) finds itself navigating a complex landscape as its stock price reflects a confluence of regulatory scrutiny, legal challenges, and promising strategic developments. Recent news of an SEC investigation into the company's data collection practices has triggered market uncertainty, while analyst perspectives and strategic initiatives paint a more nuanced picture.

The revelation on October 6 that the SEC is probing AppLovin's data collection methods sent ripples through the market, resulting in a significant 14% drop in the company's stock price during regular trading. The investigation reportedly stems from allegations of violating platform partners' service agreements to enhance targeted advertising. Short-seller reports and a whistleblower complaint further fueled concerns, prompting the SEC to examine the company's practices.

Despite the regulatory cloud, some analysts maintain a positive outlook on AppLovin's prospects. Bank of America (BofA) reiterated its “Buy” rating and $860 price target, viewing the stock pullback as a potential buying opportunity. BofA's analysis suggests the SEC inquiry may be in its early stages, possibly an informal information-gathering exercise.

The firm anticipates the upcoming Q3 earnings call will be a crucial catalyst for the stock. Morgan Stanley echoed this sentiment on September 29, raising its price target to $750 and reiterating an “Overweight” rating. The bank highlighted the soft launch of Axon Ads Manager, a self-serve tool for non-gaming advertisers, as a near-term driver for growth.

AppLovin's inclusion in the S&P 500 index on September 22, 2025, provided a counterweight to the negative news. This milestone typically increases demand from passive investment funds and ETFs, reflecting a degree of market confidence in the company's financial stability.

Earlier in 2025, AppLovin faced legal challenges stemming from short-seller reports alleging deceptive advertising practices and data misuse. These reports, published in February, led to an investigation by law firm Block & Leviton into potential securities law violations. AppLovin has refuted these allegations, characterizing the short reports as “clearly false.”