AppLovin CEO Adam Foroughi hit back at new short-selling allegations from Muddy Waters Research after the ad-tech company’s stock suffered its steepest drop on record on Thursday.

Foroughi penned a new blog post that asked investors to “dig deeper” on the allegations, saying the report’s claims about the success of their AI-powered ad tactics could be easily disproven by artificial intelligence models like Grok “in minutes.”

Muddy Waters on Thursday became the third short-selling firm to publish research meant to raise significant investor skepticism about the company’s technology, after AppLovin’s stock price soared more than 700% last year.

The report said AppLovin’s ad tactics “systematically” violate app stores’ terms of service by “impermissibly extracting proprietary IDs from Meta, Snap, TikTok, Reddit, Google, and others.” 

Foroughi wrote in his response that, “Our business is technical, and we get it — it’s not always easy to understand.”

“It’s also 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,” Foroughi wrote. “This complexity leaves room for short reports to stir fear and doubt.”

AppLovin shares rose almost 4% on Friday after tumbling 20% a day earlier.

Prior to Muddy Waters’ report, Fuzzy Panda Research and Culper Research published short-seller research critiquing AppLovin’s technology as the company pushes into e-commerce.

AppLovin said on Friday that it retained Alex Spiro from law firm Quinn Emanuel to do “an independent review and investigation into recent short report activity targeting the Company.”

A spokesperson told CNBC that Spiro, who also represents Elon Musk, was hired to “investigate the short sellers as these tactics of spreading misinformation for personal gain cannot be allowed to continue unchecked.”

Analysts at Loop Capital reiterated their buy rating on AppLovin and $650 price target in a note on Friday.

“We think accusations of faulty conversions and fraud are easily disproved by speaking with performance marketers and measurement companies,” they wrote. “We have been very active on this front and are confident the platform is delivering excellent performance and driving meaningful revenue momentum.”

Muddy Waters Research did not yet provide additional comment.

WATCH: AppLovin shares drop on Muddy Waters short

Artificial intelligence cloud provider CoreWeave is set to make its Nasdaq debut on Friday. The company priced shares at $40 in its initial public offering on Thursday, raising $1.5 billion.

As a supplier to OpenAI, CoreWeave is among the beneficiaries of the rise of generative AI software such as the San Francisco AI startup’s ChatGPT assistant, which launched in late 2022.

Microsoft provided cloud services to OpenAI but quickly called in CoreWeave, which rents out access to its hundreds of thousands of Nvidia graphics processing units, to provide additional capacity. In 2024, 62% of CoreWeave’s $1.92 billion in revenue came from Microsoft.

But Microsoft is also a competitor, as are Amazon, Google and Oracle.

Few technology companies have joined stock exchanges since late 2021, when investors became more cautious about inflation, leading central banks to raise interest rates. That in turn made unprofitable companies less attractive.

There were been just 13 venture-backed technology IPOs in 2022, 2023 and 2024, compared with 77 in 2021, according to data from Jay Ritter, an emeritus professor of finance at the University of Florida.

CoreWeave reported a $863 million net loss in 2024, but it was in growth mode, with revenue growing 737% year over year. It had raised almost $13 billion in debt as of Dec. 31, with much of that allocated for GPUs that go inside the company’s leased data centers in the U.S. and abroad.

The technology industry can now boast the largest U.S. IPO since automation software maker UiPath‘s $1.57 billion New York Stock Exchange debut in 2021. Still, CoreWeave downsized its offering to 37.5 million shares from 49 million and priced below the initial range of $47 to $55 each.

Since CoreWeave filed its prospectus with the Securities and Exchange Commission on March 3, digital physical therapy company Hinge Health and Swedish online lender Klarna have done the same. Discord, which runs popular chat software, has hired banks for an IPO, Bloomberg reported on Wednesday.

CoreWeave’s arrival on Nasdaq might inspire other AI companies to go public, too. An “AI parade” might be on the way, Mark Klein, CEO of SuRo Capital, which invests in private companies, told CNBC earlier.

Data analytics company Databricks, which partly generates revenue by running AI models on behalf of clients, announced a funding round at a $62 billion valuation in December. OpenAI, for its part, was in talks to raise money at a $340 billion valuation as of January.

CoreWeave was founded in 2017 and is based in Livingston, New Jersey, with 881 employees at the end of 2024. Before CoreWeave’s IPO, Michael Intrator, the company’s co-founder and CEO, controlled 38% of its voting power, while Nvidia held 1%. Other investors include Fidelity and Magnetar.

WATCH: The slowdown of the AI buzzword momentum trade will hurt CoreWeave, says NYU’s Aswath Damodaran