AppLovin (APP.US) was scared and sold, Citi bucked the trend and was optimistic: the stock price was seriously undervalued!

Zhitong Finance App learned that US stocks and AI app leader AppLovin (APP.US) plummeted nearly 12% on Monday, continuing the sharp sell-off trend since February 14, hitting a record high of $510. The cumulative decline has exceeded 50%. Despite this, Citi reiterated its “buy” rating and maintained its target price of $600, believing that the “false accusations” in the recent bearish report and the overall sell-off in Momentum shares were one of the reasons for this decline.

Citigroup analysts led by Jason Bazinet wrote in the report: “Based on peers' revenue growth rate, EBITDA margin, and equity value, AppLovin's reasonable valuation should be $550 per share.” Citi pointed out that the current valuation suggests that the probability that AppLovin's equity value will return to zero is as high as 50%. This figure is what Citi calls “abnormally high.”

Citi attributed the market's doubts about AppLovin to the opaque business model behind the company's rapid success, rather than the validity of the bearish argument.

According to information, Fuzzy Panda and Culper, two shorting agencies recently released a joint shorting report pointing out AppLovin's fraud and theft, accusing it of using covert click inducement and click fraud to make users click ads without their knowledge, thereby inflating the ad click-through rate (CTR).