Promises of what AI can do for a company’s bottom line have led investors—when those promises do not pan out – to claim they were misled. Below are two examples.
Retirement Systems Sues AppLovin for Fraud
Wayne County Employees’ Retirement System v. AppLovin Corporation et al., No. 4:25-cv-03438-HSG, N.D. Calif., San Jose Div.
The Wayne County Employees’ Retirement System (Wayne County ERS) has filed a class action against AppLovin Corporation and three executives, alleging securities fraud. The case accuses AppLovin of “click spoofing,” improper app installations, and misleading investors about its AI platform AXON 2.0. Reports by Culper, Fuzzy Panda, and Muddy Waters, investigative financial research publishers, highlighted these practices, causing stock drops of 12.2% and 20.1%. Wayne County ERS claims violations of Sections 10(b) and 20(a) of the Securities Exchange Act, seeking damages for those who had investments from May 10, 2023, to March 26, 2025. AppLovin has denied the allegations and defends its business practices.
Investors Sue Trade Desk Over Kokai Platform Rollout
Savorelli v. The Trade Desk, Inc., No. 2:25-cv-00347, C.D. Calif.
The Trade Desk, Inc. faces a class action in California alleging investors lost money due to the company’s misleading statements about Kokai, its AI-powered advertising platform. Before Kokai, Solimar was The Trade Desk’s previous digital advertising platform, used for programmatic ad buying. In June 2024, The Trade Desk launched Kokai, a next-generation platform powered by generative AI. During the class period (May 9, 2024–Feb. 12, 2025), challenges in client transition from Solimar led to revenue shortfalls, with Q4 2024 results missing guidance and stock prices dropping 32.98% on Feb. 13, 2025. The lawsuit, filed March 5, 2025, accuses violations of Sections 10(b) and 20(a) of the Securities Exchange Act and seeks damages for investors impacted by the stock plunge.