07:41 AM EDT, 03/28/2025 (MT Newswires) -- AppLovin ( APP ) shares closed 20% lower on Thursday after short-seller Muddy Waters alleged that the company's e-commerce conversion practices represented potential violations of platform terms of service.

About 52% of AppLovin ( APP ) e-commerce conversions come from retargeting, with only 25%-35% deemed incremental, according to a report issued by Muddy Waters on Thursday.

The short-seller alleged that AppLovin ( APP ) is collecting and structuring user IDs from key platform partners, which it said "appears to be" a violation of terms of service.

"APP's advertising clients are likely sensitive to actual incrementality, which should frustrate APP's growth plans," Muddy Waters said.

AppLovin ( APP ) did not immediately respond to an MT Newswires request to comment.

AppLovin ( APP ) shares were more than 7% higher in premarket trading on Friday.