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AppLovin Corp (APP) shares jumped 5% in premarket trading after Citigroup recommended buying the shares following the weakness resulting from a report about the Securities and Exchange Commission (SEC) investigating the company’s data collection methods.

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According to a Bloomberg News report, the SEC has investigated allegations that AppLovin has been promoting more targeted advertising to consumers, which has allegedly violated platform partners’ service agreements.

Citigroup stated that AppLovin’s disclosure of the probe in a regulatory filing is a positive development, according to TheFly. The firm noted that this suggests the management does not see a material risk.

Retail sentiment around AppLovin jumped to ‘extremely bullish’ from ‘extremely bearish’ territory compared to a day ago, with message volumes at ‘extremely high’ levels, according to data from Stocktwits. The retail user message count on the stock increased by 6,214% in the last 24 hours on Stocktwits.

AppLovin’s stock had closed 14% lower on Monday after the report. Citigroup said it believes the pullback on Monday is pricing in a $680 million revenue hit, which it calls "extreme."

The Bloomberg report on Monday noted that the SEC was responding to a complaint filed by a whistleblower and multiple short-seller reports published in the past several months.

Last week, Citigroup raised its price target on AppLovin to $850 from $600 and maintained a ‘Buy’ rating. The firm had also added an "upside 90-day catalyst watch" on the stock.

Citigroup had then noted that it sees the shares moving higher in the second half of 2025 as AppLovin opens its platform to non-gaming customers on October 1. The firm expects to see the company expanding to non-mobile game inventory.

AppLovin shares have gained over 81% this year and jumped 309% in the last 12 months.

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