Welcome to The Bear Cave! Our last premium articles were “Problems at Gorilla Technology Group (GRRR)” and “Problems at Ibotta (IBTA)” and our next special investigation comes out this Thursday, April 3.
New Activist Reports
Independent researcher Lauren Balik published on Doximity (NYSE: DOCS — $11.0 billion), an online professional network for health care professionals. Ms. Balik alleged that Doximity pre-populates many of the doctor profiles on its platform and then later pressures doctors into claiming their Doximity-created accounts. In addition, Ms. Balik alleged the company is “pulling forward revenue on large accounts as their longer-tail customers churn,” highlighted increasing competition from LinkedIn and Formedics, and raised concerns that the Trump Administration could restrict pharmaceutical ad spending – a major source of revenue for Doximity.
Gotham City Research published a two-part investigation (part 1, part 2) on Kyndryl Holdings (NYSE: KD — $7.29 billion), an IT services company spun out from IBM in October 2021. Gotham City alleged Kyndryl “manipulates reported Adjusted EBITDA [and] Adjusted FCF to artificially give the appearance that it generates profits and cash flow.” Gotham City identified “accounting and disclosure irregularities” and alleged the company would face escalating IBM-related costs in the coming years. In addition, Gotham City highlighted the company “has limited proprietary software,” recently disclosed internal control issues, and concluded,
“As a result of the issues identified in this report, we believe shares are worth between $4.71-$11.50 and $0.00 per share, implying 67%-100% downside to current levels.”
NINGI Research published on Vita Coco (NASDAQ: COCO — $1.70 billion), a coconut water company. NINGI Research called the company “nothing more than a one-trick pony” and alleged that Costco would terminate its private label partnership with Vita Coco by the end of 2025, “positioning Costco as [Vita Coco’s] strongest competitor.” NINGI based its prediction on U.S. Customs and Border Protection import records that show “Costco started sourcing Kirkland Signature Coconut Water from a competing private-label manufacturer.”
Muddy Waters Research published on AppLovin (NASDAQ: APP — $92.6 billion), a mobile app monetization company. Muddy Waters called AppLovin “another scammy AdTech company” and conducted a web traffic analysis that found “~52% of APPs e-commerce conversions are retargeting and incrementality is only ~25%-35%.” Muddy Waters alleged, in part,
“To identify high value users, it appears that APP is impermissibly extracting proprietary IDs from Meta, Snap, TikTok, Reddit, Google, and others. APP then combines that misappropriated data to create artificial and persistent user IDs (aka user graphs). This is an iteration of old-school fingerprinting schemes to target ads without user consent. The user graph is augmented by Shopify events (e.g., items added to shoppers’ carts, checkout initiation), which provides APP with a black edge in the ad auctions. The last critical step in this scheme involves the aggressive use of these Persistent Identity Graphs to repeatedly target and retarget high value users, serving them with ads won at these auctions. In this way, APP claims the revenue from highly valuable last-click attributions. This subterfuge occurs outside of the platforms’ servers, making it difficult to detect.”
Muddy Waters also alleged AppLovin had ~23% churn among its e-commerce clients in Q1 2025 and concluded AppLovin’s technology could be “easily copied if not deplatformed.”
AppLovin stock fell ~15% following the Muddy Waters report.
In a press release response, AppLovin’s founder and CEO disputed the allegations and wrote, in part,
“[It’s] incredibly hard for some who don’t understand this technology to fathom that we are building the world’s best advertising AI model, so they need a simple narrative that we’re violating policies in order to comprehend our success. This complexity leaves room for short reports to stir fear and doubt.”
The AppLovin response also included an AI-generated response to the Muddy Waters report from Grok3. AppLovin subsequently “announced that it has retained Alex Spiro, partner and Co-Chair of the Investigations, Government Enforcement & White Collar Defense Practice at Quinn Emanuel Urquhart & Sullivan… to conduct an independent review and investigation into recent short report activity targeting the company.”
On February 26, both Fuzzy Panda Research and Culper Research published on AppLovin, largely over allegations of ad fraud.
Lauren Balik was the first to raise mainstream concerns about AppLovin in four articles with allegations of ad fraud, revenue round-tripping, and potential money laundering:
“AppLovin is a Round Tripping Hellhole” (January 8, 2025)
“How AppLovin Gooses Revenue” (January 21, 2025)
“AppLovin Has a ‘SuperBad’ Third-Party Gift Card Scheme Fueling Growth” (February 10, 2025)
“AppLovin’s E-Commerce Story is Nothing But a Pyramid Scheme” (February 18, 2025)
On February 20, The Bear Cave published on AppLovin and wrote:
“The Bear Cave believes AppLovin’s rapid rise — up ~750% over the last year to around 35x revenue — is fueled by low-quality revenue growth from ads that are deceptive, predatory, and at times unreadable or unclickable. Today’s investigation also explores allegations of potential ad fraud within AppLovin.”
The Bear Cave never bets against the companies it writes about and only makes money from reader subscriptions.
Recent Resignations
Notable executive departures disclosed in the past week include:
CFO of dLocal (NASDAQ: DLO — $2.37 billion) resigned after nearly one year “due to an unforeseen health issue that requires attention.” In November 2022, Muddy Waters published on the Uruguayan payments company and said the company “is likely a fraud.”
CEO of Crown Castle (NYSE: CCI — $45.1 billion) was terminated after almost one year after the company “[agreed] to sell parts of its business to focus on its core towers segment.”
CEO of Seritage Growth Properties (NYSE: SRG — $186 million) “entered into a separation and release agreement” after nearly four years. The mall REIT is down ~90% since being spun off from Sears in July 2015.
CFO of FTAI Infrastructure (NASDAQ: FIP — $533 million), Scott Christopher, “will cease serving effective immediately.” Mr. Christopher had served as CFO of FTAI Infrastructure since its spinoff from FTAI Aviation (NASDAQ: FTAI — $11.5 billion) in July 2022 and, before then, had served as the CFO of FTAI Aviation from May 2016 to July 2022.
In January, Muddy Waters alleged FTAI Aviation engaged in accounting improprieties. Starting in November 2024, FTAI Aviation received three comment letters from the SEC Division of Corporation Finance about improving disclosures, non-cash transactions, and its accounting for engine sales, among other issues (letter 1, letter 2, letter 3).
Chief Operating Officer of CRISPR Therapeutics (NASDAQ: CRSP — $3.17 billion) resigned “to pursue external opportunities” after just ten months.
Board member and former CFO of Syntec Optics Holdings (NASDAQ: OPTX — $49.5 million), Joseph Mohr, resigned after one and a half years and cited “significant governance concerns.” Mr. Mohr’s resignation was accompanied by two emails detailing deficiencies at the company (email 1, email 2). The original resignation email stated, in part,
“In early 2024, I refused to sign the 2024 Form 10-K due to financial decisions by Al Kapoor – such as SPAC revenue recognition and unrealized customer credits – a disagreement I raised directly with him. He withheld this from the board and omitted it from the April 15, 2024 8-K, falsely presenting my resignation as a strategic shift.”
The company is down ~85% since its November 2023 SPAC merger.
Data for this section is provided by VerityData from VerityPlatform.com
What to Read
“U.S. Prosecutors Probe Tip About Timing of Pfizer Vaccine” (WSJ)
“Soon after President Trump won the presidential election in November, British drugmaker GSK brought an unusual claim to federal prosecutors in Manhattan, according to people familiar with the matter.
A senior GSK scientist, who formerly worked at rival Pfizer, had told GSK colleagues that Pfizer delayed announcing the success of its Covid vaccine in 2020 until after that year’s election.”
“23andMe Went From a $6 Billion Giant to Bankruptcy. Its Former CEO Won’t Walk Away.” (WSJ)
“The company she co-founded, 23andMe, has burned through more than $1 billion and laid off more than half its staff. A board of directors Wojcicki stocked with her friends resigned en masse in September because they couldn’t get on board with her strategy for the maker of at-home DNA tests.”
Tweets of the Week
Until Thursday,
The Bear Cave