Short seller CapitalWatch has issued an apology and revised a report that leveled accusations of financial crimes against a major shareholder of mobile technology company AppLovin. The retraction sent AppLovin shares soaring, with the stock popping 14% in early trading following the news.
The report, initially published last month, alleged a series of illicit connections between Hao Tang and various criminal syndicates. CapitalWatch has now conceded that these assertions were inaccurate. In an official apology posted on X, the short-selling firm stated, “Descriptions asserting direct connections between Mr. Tang and Chen Zhi, Prince Group, Jin Bei Group, Tang Jun, and Yang Zhihui were inaccurate and failed to meet our publication standards.”
CapitalWatch further elaborated on its decision to retract specific passages, explaining, “In light of these factual discrepancies—and to prevent the spread of misinformation and protect the legal rights of the parties involved—we have decided to remove and retract the passages relevant to Mr. Tang personally.” While the company has removed the offending content, the original report remains accessible on its website.
AppLovin had previously issued a strong response to the allegations, demanding a retraction of the “defamatory and baseless” report through a cease and desist letter sent by lawyer Alex Spiro, who also represents high-profile figures such as Elon Musk.
Initially, CapitalWatch defended its investigative findings, asserting in a follow-up statement on X that its “coverage reflects a rigorous six-month investigation supported by documentary materials and multiple sources.” However, in its recent apology, the firm admitted to having “erroneously associated” a ruling from the Court of Bordeaux with Mr. Tang. Despite retracting the specific claims against Tang, CapitalWatch maintained that its overall assessment of AppLovin’s financials remains unchanged and indicated plans to continue publishing reports on the company.
This is not the first time AppLovin has been the target of scrutiny from short sellers. The company has previously faced critical reports from notable firms including Muddy Waters, Fuzzy Panda, and Culper Research. AppLovin’s CEO, Adam Foroughi, has consistently refuted these allegations. Following reports from Fuzzy Panda and Culper last year, Foroughi stated, “It’s disappointing that a few nefarious short-sellers are making false and misleading claims aimed at undermining our success, and driving down our stock price for their own financial gain.”
AppLovin, a player in the mobile advertising technology space, has demonstrated significant growth since its initial public offering in April 2021, when shares debuted at approximately $65. The company’s stock experienced a remarkable surge of over 713% in 2024, now trading well above the $450 per share mark. This impressive market performance underscores the company’s robust expansion and highlights the potential impact of unsubstantiated short-seller reports on investor sentiment and stock valuation. The digital advertising sector, particularly within the mobile gaming ecosystem, continues to be a dynamic area for investment and innovation, with companies like AppLovin leveraging data analytics and sophisticated ad platforms to capture market share. The ability to navigate regulatory scrutiny and maintain investor confidence amidst allegations remains a key challenge for growth-stage technology firms.
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