Applied Digital (NASDAQ:APLD) Stock Price Down 4.4% – Here’s Why

Shares of Applied Digital Corporation (NASDAQ:APLD) fell 4.4% during mid-day trading on Friday. The stock traded as low as $18.14 and last traded at $18.25. Approximately 18,009,333 shares traded hands during mid-day trading, a decline of 22% from the average session volume of 23,104,623 shares. The stock had previously closed at $19.09.

Applied Digital News Roundup

Here are the key news stories impacting Applied Digital this week:

• Positive Sentiment: Co-founders Wes Cummins and Jason Zhang purchased approximately $6.7 million of Applied Digital shares during the recent decline. The insider buying may signal management’s confidence that the stock is undervalued, although it does not eliminate the company’s financial risks. Applied Digital’s Co-Founders Loaded Up on Shares as the Stock Hit a One-Year Low
• Positive Sentiment: Applied Digital agreed to develop a 50-megawatt wind-powered AI and high-performance-computing data center in Texas with Soluna. Applied Digital will hold a controlling stake, provide financing and oversee operations, increasing its control over the project and potentially expanding its contracted infrastructure platform. What Is Applied Digital Really Building With Its 50 MW Texas AI Site?
• Positive Sentiment: Roth Capital initiated coverage with a Buy rating and a $35 price target, implying substantial upside from recent trading levels. The recommendation reflects Applied Digital’s reported $36 billion contracted pipeline, though much of that opportunity is dependent on future construction and funding. Roth Capital Applied Digital coverage
• Neutral Sentiment: Applied Digital is benefiting from renewed interest in neocloud and AI data-center stocks, but the broader sector rebound has been volatile and does not necessarily translate into immediate revenue for the company.
• Negative Sentiment: Investors remain concerned that AI data-center operators face an estimated $76 billion funding gap, elevated borrowing costs and bond yields approaching 15%. Applied Digital’s debt-to-equity ratio of 3.90 makes financing and capital intensity particularly important risks. Short Sellers Just Made $6 Billion Betting Against AI Data Center Stocks
• Negative Sentiment: Comparisons with Dell favor Dell because of its $95 billion AI-server backlog and lower valuation. Analysts characterize Applied Digital’s pipeline as attractive but accompanied by mounting financial and execution risks. DELL vs. APLD

Analyst Upgrades and Downgrades

A number of research firms recently commented on APLD. Roth Capital set a $35.00 target price on Applied Digital and gave the stock a “buy” rating in a research report on Wednesday. Weiss Ratings restated a “sell (d-)” rating on shares of Applied Digital in a report on Monday, October 19th. Rothschild & Co Redburn set a $22.00 price target on Applied Digital and gave the company a “neutral” rating in a report on Monday, September 21st. Zacks Research downgraded Applied Digital from a “hold” rating to a “strong sell” rating in a research note on Wednesday, August 26th. Finally, Citigroup reaffirmed a “market outperform” rating on shares of Applied Digital in a research note on Thursday, October 8th. Three equities research analysts have rated the stock with a Strong Buy rating, twelve have given a Buy rating, two have assigned a Hold rating and two have assigned a Sell rating to the company’s stock. According to data from MarketBeat, the stock has an average rating of “Moderate Buy” and a consensus price target of $59.75.

Applied Digital Stock Performance

The company has a debt-to-equity ratio of 3.90, a current ratio of 2.56 and a quick ratio of 2.56. The business has a 50-day moving average of $25.02 and a 200-day moving average of $32.13. The company has a market capitalization of $5.52 billion, a P/E ratio of -11.13 and a beta of 5.99.

Applied Digital (NASDAQ:APLD) last posted its quarterly earnings data on Wednesday, October 7th. The company reported ($0.01) earnings per share for the quarter, beating analysts’ consensus estimates of ($0.30) by $0.29. Applied Digital had a negative net margin of 51.28% and a negative return on equity of 27.21%. The business had revenue of $300.39 million for the quarter, compared to analysts’ expectations of $116.29 million. During the same quarter in the previous year, the business posted ($0.03) earnings per share. The business’s revenue was up 367.8% compared to the same quarter last year. On average, sell-side analysts anticipate that Applied Digital Corporation will post -2.17 EPS for the current year.

Insider Buying and Selling at Applied Digital

In related news, CEO Wes Cummins purchased 55,803 shares of Applied Digital stock in a transaction that occurred on Friday, October 16th. The shares were bought at an average price of $18.04 per share, with a total value of $1,006,686.12. Following the purchase, the chief executive officer directly owned 5,874,453 shares of the company’s stock, valued at approximately $105,975,132.12. This represents a 0.96% increase in their position. The purchase was disclosed in a legal filing with the Securities & Exchange Commission, which is available at this hyperlink. Also, Director Richard Nottenburg sold 75,000 shares of the firm’s stock in a transaction that occurred on Tuesday, August 4th. The stock was sold at an average price of $31.15, for a total transaction of $2,336,250.00. Following the transaction, the director directly owned 133,378 shares in the company, valued at approximately $4,154,724.70. This trade represents a 35.99% decrease in their ownership of the stock. The SEC filing for this sale provides additional information. 9.50% of the stock is currently owned by corporate insiders.

Institutional Trading of Applied Digital

A number of hedge funds have recently bought and sold shares of the stock. Situational Awareness LP boosted its position in Applied Digital by 18.9% during the 1st quarter. Situational Awareness LP now owns 13,478,438 shares of the company’s stock valued at $319,978,000 after acquiring an additional 2,139,378 shares in the last quarter. Equitec Proprietary Markets LLC purchased a new position in shares of Applied Digital in the 2nd quarter valued at $312,349,000. Hsbc Holdings PLC bought a new position in shares of Applied Digital in the 4th quarter worth $29,510,000. Sei Investments Co. raised its position in shares of Applied Digital by 33.0% in the 1st quarter. Sei Investments Co. now owns 1,093,701 shares of the company’s stock worth $25,964,000 after acquiring an additional 271,618 shares in the last quarter. Finally, UBS AM a distinct business unit of UBS ASSET MANAGEMENT AMERICAS LLC raised its position in shares of Applied Digital by 32.7% in the 2nd quarter. UBS AM a distinct business unit of UBS ASSET MANAGEMENT AMERICAS LLC now owns 581,255 shares of the company’s stock worth $21,681,000 after acquiring an additional 143,308 shares in the last quarter. Hedge funds and other institutional investors own 65.67% of the company’s stock.

Applied Digital Company Profile

Applied Digital Corporation (NASDAQ: APLD) develops and operates digital infrastructure designed to support high-performance computing and artificial intelligence applications. The company provides data-center capacity, hosting services and related infrastructure for customers that require substantial computing power and energy resources.

Its business includes high-performance computing data centers and cloud services intended to support artificial intelligence, machine learning, cryptocurrency mining and other compute-intensive workloads.