Applied Digital (NASDAQ:APLD) Shares Gap Down - Should You Sell?

Key Points

• Shares gapped down premarket — APLD closed at $23.06 and opened at $21.18 on Friday, trading about 14.8M shares and exhibiting high volatility (beta 6.77).
• Analysts are mixed but generally positive: consensus rating is "Moderate Buy" with a $26.20 average target (1 Strong Buy, 11 Buy, 1 Sell) and some firms (e.g., Lake Street) lifting targets up to $37.
• Growth with no profitability yet — Q3 revenue jumped 84.3% to $64.22M and EPS beat estimates, but the company still has negative net margin/ROE, and insiders have sold about 823,035 shares (~$18.9M) in the past three months.

Shares of Applied Digital Corporation (NASDAQ:APLD - Get Free Report) gapped down prior to trading on Friday . The stock had previously closed at $23.06, but opened at $21.18. Applied Digital shares last traded at $23.53, with a volume of 14,809,549 shares changing hands.

Analyst Upgrades and Downgrades

Several research analysts have recently issued reports on APLD shares. B. Riley reaffirmed a "buy" rating on shares of Applied Digital in a research note on Wednesday, October 22nd. Weiss Ratings restated a "sell (d-)" rating on shares of Applied Digital in a report on Wednesday, October 8th. Wall Street Zen cut shares of Applied Digital from a "hold" rating to a "sell" rating in a research report on Sunday, October 19th. Lake Street Capital increased their price target on shares of Applied Digital from $18.00 to $37.00 and gave the company a "buy" rating in a research report on Friday, October 10th. Finally, Compass Point began coverage on shares of Applied Digital in a research note on Monday, September 15th. They set a "buy" rating for the company. One analyst has rated the stock with a Strong Buy rating, eleven have issued a Buy rating and one has issued a Sell rating to the company. According to MarketBeat, the stock currently has an average rating of "Moderate Buy" and a consensus target price of $26.20.

Applied Digital Price Performance

The company has a debt-to-equity ratio of 0.29, a current ratio of 0.65 and a quick ratio of 0.65. The stock has a market capitalization of $6.99 billion, a PE ratio of -21.75 and a beta of 6.77. The company has a 50-day moving average of $27.30 and a two-hundred day moving average of $16.46.

Applied Digital (NASDAQ:APLD - Get Free Report) last posted its quarterly earnings data on Thursday, October 9th. The company reported ($0.03) EPS for the quarter, beating analysts' consensus estimates of ($0.11) by $0.08. Applied Digital had a negative net margin of 111.29% and a negative return on equity of 37.14%. The company had revenue of $64.22 million during the quarter, compared to the consensus estimate of $52.25 million. During the same quarter in the prior year, the company posted ($0.15) EPS. The company's quarterly revenue was up 84.3% compared to the same quarter last year. Sell-side analysts predict that Applied Digital Corporation will post -0.96 EPS for the current fiscal year.

Insider Activity at Applied Digital

In related news, Director Rachel H. Lee sold 24,213 shares of the stock in a transaction on Friday, October 24th. The stock was sold at an average price of $33.20, for a total value of $803,871.60. Following the transaction, the director directly owned 59,400 shares of the company's stock, valued at approximately $1,972,080. This trade represents a 28.96% decrease in their position. The sale was disclosed in a filing with the SEC, which can be accessed through the SEC website. Also, Director Chuck Hastings sold 25,000 shares of Applied Digital stock in a transaction on Friday, October 31st. The shares were sold at an average price of $34.27, for a total value of $856,750.00. Following the completion of the transaction, the director owned 426,612 shares in the company, valued at $14,619,993.24. The trade was a 5.54% decrease in their position. Additional details regarding this sale are available in the official SEC disclosure. Over the last three months, insiders sold 823,035 shares of company stock worth $18,930,179. 9.50% of the stock is owned by corporate insiders.

Institutional Trading of Applied Digital

Large investors have recently bought and sold shares of the company. Hood River Capital Management LLC boosted its stake in shares of Applied Digital by 2.8% in the second quarter. Hood River Capital Management LLC now owns 21,859,031 shares of the company's stock valued at $220,120,000 after purchasing an additional 592,314 shares during the period. Vanguard Group Inc. lifted its holdings in Applied Digital by 23.2% in the 3rd quarter. Vanguard Group Inc. now owns 17,722,174 shares of the company's stock worth $406,547,000 after buying an additional 3,339,062 shares in the last quarter. Situational Awareness LP boosted its position in Applied Digital by 63.3% in the 2nd quarter. Situational Awareness LP now owns 6,591,800 shares of the company's stock valued at $66,379,000 after buying an additional 2,556,200 shares during the last quarter. BNP Paribas Financial Markets increased its position in shares of Applied Digital by 24,356.8% during the second quarter. BNP Paribas Financial Markets now owns 5,219,565 shares of the company's stock worth $52,561,000 after acquiring an additional 5,198,223 shares during the last quarter. Finally, Two Sigma Investments LP purchased a new stake in shares of Applied Digital during the third quarter worth about $69,535,000. Institutional investors and hedge funds own 65.67% of the company's stock.

Applied Digital Company Profile

Applied Digital Corporation designs, develops, and operates datacenters in North America. Its datacenters provide digital infrastructure solutions to the high-performance computing industry. The company also provides artificial intelligence cloud services, high performance computing datacenter hosting, and crypto datacenter hosting services.

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