AppLovin Shares Surge as Research Firm Retracts Allegations

AppLovin's stock staged a dramatic recovery on Monday, soaring between 13% and 15% to close near $460. This sharp reversal was triggered by a public retraction from research firm CapitalWatch, occurring just two days before the company's highly anticipated quarterly earnings release.

Amid the volatility, analysts at Jefferies reaffirmed their bullish stance. The firm's strategist, James Heaney, characterized the recent sell-off—which had seen the stock shed roughly 40% of its value since the start of the year—as an "excellent buying opportunity."

Jefferies maintains a "Buy" rating with an $860 price target. Heaney contends that market concerns surrounding initiatives like Google's "Project Genie" and other AI-powered gaming tools are overblown. In his view, the stock's valuation has become excessively disconnected from its fundamental growth prospects. The analyst team anticipates the upcoming quarterly report will reveal revenues exceeding expectations, driven by strength in both gaming and e-commerce advertising.

CapitalWatch Issues Apology and Full Retraction

The primary catalyst for Monday's rally was a formal withdrawal by CapitalWatch. On February 9th, the research firm retracted a January report that had accused major shareholder Hao Tang of involvement in illicit financial transactions.

Should investors sell immediately? Or is it worth buying Applovin?

In an apology, CapitalWatch admitted to a "faulty verification process," explaining that the allegations were based on a confusion with unrelated court documents. The original report had significantly pressured the share price earlier in the year, as investors feared potential regulatory repercussions. The removal of this uncertainty prompted an immediate positive market reaction.

Key Developments and Upcoming Report

• CapitalWatch fully retracted its accusations against a major shareholder.
• Jefferies labeled the recent price decline a prime chance for investors to buy.
• Fourth-quarter and full-year 2025 results are scheduled for release after the U.S. market closes on Wednesday, February 11th.
• Prior to the rebound, AppLovin's stock had lost approximately 40% of its value.

Investor Focus Shifts to AI Execution and Earnings

AppLovin is set to publish its financial results for the fourth quarter and full year 2025 this Wednesday, February 11th. Investor attention is now squarely on the company's execution of its artificial intelligence strategy.

Recent volatility was fueled by fears that generative AI tools from competitors like Google could democratize game development, thereby undermining the value of AppLovin's discovery platform. Proponents of the company argue that its "AXON" AI engine will maintain a dominant position in the ad-tech sector, securing high margins even as it expands into non-gaming verticals. The performance of its software platform segment and the outlook for its AI-driven advertising technology business are expected to be central themes in the upcoming earnings report.