While AppLovin continues to demonstrate operational strength, a cloud of regulatory uncertainty is dampening investor sentiment. A previously disclosed investigation by the U.S. Securities and Exchange Commission (SEC) has resurfaced as a primary concern, overshadowing recent positive business developments. The lack of clarity from regulators regarding the scope and specific allegations presents a key challenge for the market in assessing the true level of risk.
Strong Operational Performance Overshadowed
The company’s fundamental business metrics tell a story of robust growth. For the fourth quarter of 2025, AppLovin reported revenue of $1.66 billion, a 66% increase year-over-year. Earnings per share came in at $3.24. Both figures exceeded market expectations. The adjusted EBITDA margin reached 84%, and free cash flow surged to $1.31 billion, marking an 88% rise.
Looking ahead, management’s guidance for Q1 2026 remains constructive, forecasting revenue between $1.745 billion and $1.775 billion. This represents sequential growth of 5% to 7%, with an anticipated EBITDA margin holding steady at 84%. Despite these strong results, shares had already weakened following the earnings release as broader competitive and market concerns took precedence over the earnings beat.
SEC Investigation Weighs on Market Sentiment
The recent pressure on the stock price stems from renewed market focus on an ongoing SEC probe. A delayed reaction to a Friday report confirmed the investigation remains “active and ongoing.” This information became public because the SEC denied a request to release internal documents, arguing that disclosure could interfere with an active enforcement investigation.
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The regulator cited standard procedural risks, such as the potential for evidence fabrication, witness tampering, or document alteration. A critical point of uncertainty is that the SEC has not publicly disclosed the precise subject matter or scope of its inquiry. Furthermore, AppLovin and its executives have not been formally accused of any wrongdoing. Reports suggest the investigation originated from a whistleblower complaint and several short-seller reports published in recent months. As far back as October 2025, allegations surfaced that AppLovin may have violated agreements with platform partners to deliver more targeted advertising.
Technical Chart Reflects Prevailing Caution
The market’s reaction was swift. A sell-off on Monday effectively erased the gains made during the previous week, with shares closing at €322.85. This leaves the stock down 38.81% year-to-date, despite a minor weekly recovery.
The technical picture underscores persistent investor nervousness. The share price is trading significantly below its 50-day moving average of €484.47. This chart pattern typically indicates a market that lacks confidence and needs to rebuild a foundation of trust.
In summary, AppLovin finds itself at a crossroads where impressive financial performance collides with an unresolved regulatory overhang. The next significant catalyst for the stock is less likely to emerge from routine business updates and more from any future communication—or lack thereof—from the SEC regarding the status of its investigation.
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