Monthly Report8 min read

February 2025 Activist Short Selling Report

February 2025 Activist Short Selling Performance Report Executive Summary 10 Total Reports -5.9% Average Impact 90% Success Rate February 2025 will be remembered as the month activist short sellers…

Activ8 Newsroom • December 12, 2025

February 2025

Activist Short Selling Performance Report

Executive Summary

Total Reports

-5.9%

Average Impact

90%

Success Rate

February 2025 will be remembered as the month activist short sellers laid siege to AppLovin. Four separate research firms targeted the mobile ad giant in a coordinated assault that sent shockwaves through tech investors. Beyond the APP spectacle, Blue Orca's devastating strike on Teladoc and Grizzly's painful misfire on GeneDx demonstrated that conviction cutting both ways remains the defining characteristic of this space. With a 90% success rate and nearly 6% average impact, February delivered strong results despite one spectacular failure that dragged down the averages.

Top Performers

Best Performing Short ReportsAPP
-33.4%
The Bear Cave
TDOC
-26.5%
Blue Orca Capital
APP
-19.9%
Sakura Research
AAOI
-8.9%
Culper Research
RKLB
-5.6%
Bleecker Street Research

The Bear Cave's February 20th report on AppLovin proved to be the month's standout performer, triggering a 33% collapse that validated concerns about the company's advertising practices. Blue Orca's methodical dissection of Teladoc's AI therapy scandal delivered similarly devastating results, with the telehealth giant shedding over a quarter of its value. The APP siege created a unique situation where timing mattered enormously: early entrants captured substantial downside while late arrivals found diminishing returns.

Bottom Performers

Reports That Missed The MarkWGS
+44.6%
Grizzly Research
APP
-0.8%
Culper Research
APP
-0.8%
Fuzzy Panda Research
PGY
-3.5%
Iceberg Research
DY
-4.2%
Spruce Point Management

Grizzly Research's GeneDx short stands out as February's cautionary tale. Despite alleging systematic billing fraud and insider enrichment, WGS surged nearly 45% as the market shrugged off the accusations. This represents one of the largest short squeezes against an activist campaign in recent memory. Meanwhile, Culper and Fuzzy Panda's late-stage entries into APP on February 26th captured minimal downside, demonstrating how crowded trades can leave latecomers with crumbs.

The AppLovin Siege: Anatomy of a Coordinated Attack

Four research firms. One target. $234 billion in market cap under assault.

The Bear Cave

Feb 20 - First to strike

Impact: -33.4%

Alleged deceptive advertising and predatory practices

Sakura Research

Feb 25 - Followed up

Impact: -19.9%

Claimed circular revenue schemes with shell developers

Culper Research

Feb 26 - Late entry

Impact: -0.8%

Focused on hidden device identifiers bypassing Apple ATT

Fuzzy Panda Research

Feb 26 - Late entry

Impact: -0.8%

Alleged ad fraud and targeting children with predatory content

The AppLovin siege represents the most concentrated activist short attack on a single company in recent memory. What makes this coordinated assault remarkable is the variety of angles employed. Each firm approached APP from different vulnerabilities: ad fraud, data privacy violations, developer manipulation, and targeting minors. The timing pattern reveals the value of being first; The Bear Cave captured 33% downside while firms arriving just six days later found the stock already heavily discounted.

Market Breakdown

NASDAQ

8 reports (80% of total)

Avg. Impact: -3.5%

Dominated by tech and software targets

NYSE

2 reports (20% of total)

Avg. Impact: -15.3%

Higher impact per report

The exchange disparity tells an interesting story. While NASDAQ dominated volume with 8 of 10 reports, NYSE targets proved far more vulnerable, posting average declines of 15.3% versus NASDAQ's 3.5%. This divergence is largely explained by the concentration of APP reports on NASDAQ, where late entrants diluted average performance, while NYSE's smaller sample included the devastating Teladoc collapse.

Geographic Distribution

United States

9 reports (90% of total)

Avg. Impact: -6.2%

Spanning tech, healthcare, and industrials

Israel

1 report (10% of total)

Avg. Impact: -3.5%

Pagaya Technologies (PGY)

February's geographic concentration in the United States reflects the dominant theme of targeting high-flying tech and healthcare companies. The sole international target, Pagaya Technologies, is an Israeli fintech that trades on NASDAQ. Iceberg Research's allegations of hidden losses through affiliated funds produced modest downside, suggesting international fintechs may have more resilient investor bases during short attacks.

Industry Analysis

Industry	Reports	Avg. Impact	Key Targets
Software - Application	4	-13.7%	APP (x4)
Medical - Healthcare Info	2	+9.1%	TDOC, WGS
Semiconductors	1	-8.9%	AAOI
Aerospace & Defense	1	-5.6%	RKLB
Engineering & Construction	1	-4.2%	DY
Software - Infrastructure	1	-3.5%	PGY

Software application companies bore the brunt of activist attention, with all four APP reports driving a -13.7% sector average. The healthcare information services sector presents a statistical anomaly: while Blue Orca's Teladoc report was devastating (-26.5%), Grizzly's GeneDx disaster (+44.6%) completely inverted the sector average. This demonstrates how a single outlier can dramatically skew sector-level analysis, making company-specific evaluation essential.

Firm Rankings

February 2025 Performance by Research FirmThe Bear Cave
1 Report | -33.4% Avg
100%
Blue Orca Capital
1 Report | -26.5% Avg
100%
Sakura Research
1 Report | -19.9% Avg
100%
Culper Research
2 Reports | -4.9% Avg
100%
Bleecker Street
1 Report | -5.6% Avg
100%
Spruce Point
1 Report | -4.2% Avg
100%
Iceberg Research
1 Report | -3.5% Avg
100%
Fuzzy Panda
1 Report | -0.8% Avg
100%
Grizzly Research
1 Report | +44.6% Avg
0%

The Bear Cave's dominant February performance continues their impressive recent streak, demonstrating that thorough investigative journalism on ad tech can move markets dramatically. Blue Orca's healthcare expertise shone through with their Teladoc work. Grizzly Research's GeneDx misfire stands as a reminder that even experienced firms can face brutal short squeezes when market sentiment diverges from fundamental analysis. The lesson: billing fraud allegations require ironclad evidence and favorable market conditions to succeed.

Notable Campaigns

Blue Orca vs. Teladoc (TDOC)

Blue Orca Capital | NYSE

-26.5%

Blue Orca alleged that BetterHelp patients unknowingly received AI-generated therapy despite paying up to $400/month for human therapists. The report detailed perverse incentive structures, aggressive accounting practices that inflated EBITDA by 32%, and three CAO departures since May 2024. The combination of ethical violations and financial engineering proved devastating.

Healthcare AI/Ethics

Grizzly vs. GeneDx (WGS)

Grizzly Research | NASDAQ

+44.6%

Despite alleging illegal "code stacking" to improperly bill Medicare/Medicaid, insider selling, and 25% revenue inflation, WGS surged 45%. Law firms announced investigations, but the market dismissed concerns. This represents one of the year's most painful short squeeze events, demonstrating that fraud allegations without immediate regulatory action can backfire spectacularly.

Healthcare Billing Fraud

Culper vs. Applied Optoelectronics (AAOI)

Culper Research | NASDAQ

-8.9%

Culper accused AAOI of grossly overstating 800G transceiver development progress and misrepresenting relationships with Amazon and Microsoft. The report drew parallels to 2016-2018 when similar claims preceded 90%+ shareholder losses. With $6M+ in insider sales over four months, the thesis of history repeating resonated with investors.

Semiconductors Execution Risk

Bleecker Street vs. Rocket Lab (RKLB)

Bleecker Street Research | NASDAQ

-5.6%

Bleecker claimed Rocket Lab's mid-2025 Neutron launch timeline is unattainable, citing 20+ aerospace expert interviews expecting 12-24 month delays. Missing this milestone could eliminate Space Force contract eligibility. Despite a 400%+ stock surge, the report triggered a 10% drop and subsequent class-action lawsuit.

Aerospace Timeline Risk

Strategic Insights

1First-Mover Advantage in Pile-On Scenarios
The APP siege demonstrates that being first matters enormously in coordinated attacks. The Bear Cave captured 33% downside while firms arriving six days later found less than 1% remaining. When multiple researchers target the same company, the value accrues disproportionately to the first mover.
2Healthcare Billing Fraud Requires Regulatory Catalyst
Grizzly's GeneDx failure compared to Blue Orca's Teladoc success reveals a critical distinction. TDOC's allegations involved consumer-facing ethical violations that drew immediate attention, while WGS's billing fraud claims required regulatory action that hasn't materialized. Without enforcement catalyst, fraud allegations can become short squeeze fuel.
3Historical Pattern Recognition Adds Credibility
Culper's AAOI report drew explicit parallels to 2016-2018 management failures, when similar overpromising preceded massive shareholder losses. Companies with documented histories of underdelivering present more defensible short theses because investors recognize patterns of behavior.
4NYSE Targets Showed Greater Vulnerability
While NASDAQ dominated volume, NYSE targets averaged 15.3% declines versus 3.5% for NASDAQ. This may reflect institutional investor concentration on NYSE, where shareholders respond more dramatically to governance and accounting concerns compared to NASDAQ's more retail-heavy tech names.
5Ad Tech Remains Fertile Ground for Activist Scrutiny
The four-firm assault on AppLovin underscores that mobile advertising remains one of the most target-rich environments for short sellers. Opacity around data practices, platform dependencies (Apple ATT), and advertiser relationships create multiple attack vectors that traditional analysis struggles to evaluate.

Final Thoughts

Bottom Line: February 2025 showcased both the power and perils of activist short selling. The AppLovin siege demonstrated how coordinated research can dismantle a $234 billion valuation, while Grizzly's GeneDx disaster reminded everyone that even well-researched fraud allegations can backfire without immediate regulatory validation.

The 90% success rate and 5.9% average impact represent solid performance, though these figures mask enormous dispersion. The Bear Cave and Blue Orca delivered exceptional returns on single targets, while late entrants and the GeneDx short faced painful outcomes. As always, timing and thesis quality matter more than simply being right about a company's flaws.

Looking ahead, the ad tech scrutiny that defined February seems likely to continue as Apple's privacy framework creates ongoing uncertainty for companies dependent on mobile tracking. Healthcare remains a bifurcated opportunity: consumer-facing ethical violations can crater stocks, but billing fraud requires regulatory teeth to translate into returns.