Shares of AppLovin Corporation (APP) experienced a significant sell-off on Monday, October 6, 2025, after Bloomberg reported the Securities and Exchange Commission (SEC) has launched an investigation into the mobile advertising firm. This follows a whistleblower complaint and multiple short-seller reports alleging violations of app store terms of service related to data collection practices. AppLovin’s stock plummeted 14% during regular trading and continued falling another 3.28% in pre-market hours on Tuesday, reaching $567.75 as of 6:16 AM EDT. The investigation focuses on whether the company systematically violated service agreements with platform partners by extracting user identification data without proper consent for targeted advertising. AppLovin has issued a measured response to the news, stating it routinely engages with regulators and addresses inquiries in the ordinary course. However, the SEC is yet to formally accuse the company of wrongdoing. While AppLovin’s stock has experienced a dramatic surge this year, the investigation casts doubt on its future performance. The company faces potential policy violations and scrutiny from prominent short-sellers, including Muddy Waters Research, Fuzzy Panda Research, and Culper Research. Analysts remain cautious about the company’s prospects as upcoming earnings are scheduled for November 5, 2025. Despite the recent SEC probe, the company remains profitable with a high return on equity and strong revenue growth in recent years. However, investors will closely monitor both the company’s financial performance and updates regarding the investigation.