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Russian (RU) Geoffrey Seiler, The Motley Fool
Sat, May 17, 2025, 3:25 PM 5 min read
In This Article:
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AppLovin's technology has come under scrutiny from short sellers.
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However, renowned tech investor Chase Coleman initiated a new position in the stock last quarter.
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The company has been seeing tremendous growth and trades at a reasonable valuation.
AppLovin (NASDAQ: APP) has been a lightning rod for controversy recently, with three separate short sellers issuing bearish reports on the company this year. However, one billionaire investor was clearly unconvinced by the reports, making AppLovin stock the largest new position in his portfolio during the first quarter.
Billionaire Chase Coleman of Tiger Global Management bought nearly $575 million worth of AppLovin stock last quarter, the most he bought of any stock in the period. The stock now represents a 1.7% position and is his 16th-largest holding.
Coleman is a highly successful, growth-oriented investor specializing in tech stocks who generally takes a long-term view. He tends to maintain a concentrated portfolio and isn't afraid to be aggressive. As such, his purchase of AppLovin stock is a big vote of confidence in the stock. Investors like Coleman have a lot of resources and connections, and he surely did his due diligence before investing.
AppLovin's core business is an advertising platform that gaming app companies use to help them attract and better monetize users. It also owns a legacy portfolio of gaming apps that it is currently in the process of selling.
The introduction of its Axon 2 artificial intelligence (AI)-based advertising technology in the second quarter of 2023 helped transform the company and set it on a path of huge revenue growth.
According to the company, the AI-advertising engine uses predictive machine learning to improve ad targeting, bidding, and ad placement. Its goal is to find gamers most likely to download apps or engage with an ad. Meanwhile, Axon 2 helps predict which ads will yield the highest return on ad spending budgets.
However, not everyone is buying into what Axon 2 does. Short sellers have basically accused AppLovin of installing apps onto users' devices without their permission. This would be a serious violation of most app stores, which could lead to its software getting banned on these platforms.
AppLovin has denied the allegations and even hired lawyers to investigate the short sellers. CEO Adam Foroughi said the complexity of Axon 2.0's technology has allowed short sellers to "stir fear and doubt," and he told investors to "dig deeper." Coleman apparently took up Foroughi's challenge to dig deeper, leading to his sizable investment in the company's stock.
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