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Why Cheetah Mobile Stock Fell Friday

What happened

Shares of Cheetah Mobile (NYSE: CMCM), a mobile app company, fell sharply on Friday. As of 1:08 p.m. EST, the stock was down 15%.

The stock's decline follows news that Alphabet's (NASDAQ: GOOG) (NASDAQ: GOOGL) Google disabled Cheetah Mobile's accounts across Google products.

Image source: Getty Images.

So what

Google disabled Cheetah's accounts across the Google Play Store, Google AdMob, and Google Ad Manager, Cheetah announced on Friday. In addition, all associated contracts with the accounts are set to be terminated.

With 22.6% of Cheetah Mobile's revenue in the first nine months of 2019 generated with the help of Google products, Cheetah said its revenue and ability to attract new users "may be materially adversely affected" starting in February 2020.

"According to Google, the decision was made because some of the Company's apps had not been compliant with Google policies, resulting in certain invalid traffic," said the tech company in its press release.

Now what

Cheetah is working to "appeal the decision, clarify any misunderstanding, and adopt any requisite remedial measures to restore the disabled accounts," management said. But this process may be time consuming and is not guaranteed to be successful, Cheetah warned.

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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Daniel Sparks has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Alphabet (A shares) and Alphabet (C shares). The Motley Fool has a disclosure policy.


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