Wells Fargo Defends AppLovin (APP) Amid Muddy Waters Report Claiming 52% Retargeting Sales, Reiterates $538 Price Target

AppLovin Corp (NASDAQ: APP) is facing scrutiny following a report from Muddy Waters, which claims that approximately 52% of the company's e-commerce sales are derived from retargeting efforts, with only 25-35% of those being incremental. This contrasts sharply with the company's CEO's assertion that nearly 100% of sales are incremental. Additionally, Muddy Waters estimates a churn rate of about 23% for the first quarter of 2025, contradicting the CEO's statement of 'no churn.' In response, Wells Fargo has defended AppLovin, reiterating an Overweight rating and a price target of $538. Analysts at Wells Fargo suggest that their checks indicate a stronger level of e-commerce incrementality, estimating that 55-60% of AppLovin's e-commerce customers are new to the brand. They criticized Muddy Waters for basing its claims on only five customer checks, asserting that their own findings demonstrate the strength of AppLovin's e-commerce business.