How might the allegations of reverse engineering and exploitation of Meta Platforms' advertising data affect AppLovin's relationships with key partners and its future revenue streams?

The reverse‑engineering and “ad‑fraud” accusations put by the former Louisiana attorney general and amplified by analyst reports create a multi‑layered risk for AppLovin (APP). From a partnership standpoint, advertisers and platform owners—particularly Meta, its largest supply‑side partner—are likely to scrutinize the data‑sharing and attribution practices that underpin AppLovin’s core monetisation engine. If Meta de‑platforms or imposes stricter data‑usage restrictions, we could see a rapid contraction in fill‑rates and eCPM levels, eroding the company’s primary revenue driver (mobile‑app install and in‑app‑advertising spend). Likewise, other demand‑side partners (e.g., TikTok, Snap, Unity) may demand contractual safeguards or pause spend until the investigation clarifies compliance, further pressuring top‑line growth.

Fundamentally, the allegation adds a contingent liability that is not yet quantified but could translate into sizable legal fees, potential settlements, and mandatory retro‑active refunds to advertisers. That risk is already reflected in the steep negative sentiment (‑70) and a widening discount to its 12‑month forward‑EV/EBITDA multiple (now ~9‑10× versus ~13× pre‑news). Technically, APP is trading below its 200‑day moving average, with the 50‑day MA turning downward and the RSI hovering around 35, indicating oversold momentum but also limited upside without a catalyst. A short‑term trade idea would be to position defensively: consider a modest short or put‑spread targeting a 5‑7% pullback over the next 4‑6 weeks, while keeping a watch for any settlement announcement or a formal response from Meta that could temporarily buoy sentiment. Conversely, investors with a high risk‑tolerance might buy on the dip, betting that the investigation stalls and that AppLovin can renegotiate data‑usage terms without a material revenue hit. In either case, monitor: (1) Meta’s public stance or any platform‑level policy changes; (2) SEC filings for material contingent liabilities; and (3) quarterly earnings guidance for revisions to ad‑spend forecasts.