AppLovin Huge Short Interest Notional and Value at Risk for Large-Cap

AppLovin has surged dramatically, gaining 712% in 2024, 278% in 2023, and 72% so far this year. The company leverages AI for optimized advertising through advanced machine learning techniques.

AppLovin holds a $12 billion short notional position, about 10% of its market cap—the largest outside the Mag7 stocks. These stocks have a real-time short interest % of float near 1%, according to short interest analytics, making AppLovin the most squeezable stock in the U.S. outside the Mega-Caps.

This surpasses Palo Alto Networks (PANW) with a $10 billion short position driven by risk arbitrage, and Robinhood (HOOD) at $7 billion, with numerous stocks trailing below $5 billion in short interest data.

AppLovin’s smaller size and heightened volatility boost its daily value-at-risk ranking to fifth overall, despite its market cap being far lower than the trillion-dollar Mega-Caps. The doubling of short interest is a classic case of shorting into strength, a reversal pattern.

AppLovin experienced squeeze pressure during its rally but is now trading lower. If the stock rises again, it could trigger another short squeeze. It holds the largest short position outside the Mega-Caps, which generally do not experience squeezes.

The bullish case involves: AI leverage via Axon 2.0, software-led margin expansion, gaming divestiture, impact from recent S&P 500 addition and a pivot to AI-driven advertising monetization.

The bearish case involves concerns over valuation, lack of transparency around Axon’s AI, a short interest spike, advertising cyclicality, and loss of gaming revenue.

This chart compares AppLovin’s performance to a synthetic AI index built from the AIQ ETF divided by the QQQ. While scaled differently, both show recent rises and overall high correlation, underscoring AppLovin’s reliance on broader AI sentiment.

As short interest surged, a few analysts turned bearish, but most remain bullish. Volatility had been declining since April’s sell-off, as AppLovin rallied steadily. However, with the recent pullback, volatility has increased.

AppLovin is the most volatile U.S. stock with a market cap over $100 billion, nearly twice as volatile as Tesla (TSLA)—making it a standout in both short interest analytics and value-at-risk metrics.

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