Applied Digital (NASDAQ:APLD) Stock Price Down 9% - Should You Sell?

Key Points

• Applied Digital shares fell 9% to about $19.09 in heavy trading, extending weakness below the stock’s 50-day and 200-day moving averages.
• The company announced a 50-megawatt AI and high-performance-computing data center joint venture with Soluna Holdings in Texas, while its ChronoScale unit signed a nonbinding letter of intent to lease the site.
• Despite strong revenue growth and an earnings beat, Applied Digital remains unprofitable, highly leveraged and volatile. Analysts hold a consensus “Moderate Buy” rating, though some firms have issued “Strong Sell” calls; insider purchases and bullish price targets provide counterpoints.

Applied Digital Corporation (NASDAQ:APLD - Get Free Report)'s stock price dropped 9% during mid-day trading on Thursday. The stock traded as low as $18.72 and last traded at $19.09. 26,528,714 shares traded hands during trading, an increase of 15% from the average daily volume of 23,136,164 shares. The stock had previously closed at $20.98.

Key Applied Digital News

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

• Positive Sentiment: Applied Digital agreed with Soluna Holdings to develop a 50-megawatt AI and high-performance-computing data center at the Dorothy 3 site in Texas. Applied will own 51% of the joint venture, and the facility is expected to use power from a nearby wind farm, supporting the company’s strategy of expanding AI infrastructure. Soluna Holdings and Applied Digital Partner to Develop 50 MW AI-Focused Data Center in Texas
• Positive Sentiment: Applied’s majority-owned neocloud business, ChronoScale, signed a nonbinding letter of intent to lease the site. A future lease could provide an anchor customer, although it is not yet a binding revenue contract. Soluna and Applied Digital to build 50 MW wind-powered AI data center in Texas
• Positive Sentiment: Roth/MKM reinstated coverage with a Buy rating and a $35 price target, implying substantial upside from recent levels. The bullish call adds support to the AI-data-center growth thesis after APLD shares had fallen sharply over the past year. Roth/MKM Reinstates Applied Digital at Buy
• Positive Sentiment: Strong industry commentary about limited power availability and sustained AI infrastructure demand helped lift Applied Digital alongside other data-center stocks. Reports also highlighted recent insider buying as a supporting signal. TeraWulf Jumps as Power Demand Remains Extremely Strong

Wall Street Analyst Weigh In

Several equities analysts recently commented on the company. UBS Group restated a "buy" rating on shares of Applied Digital in a research report on Thursday, October 8th. B. Riley Financial reaffirmed a "buy" rating and issued a $75.00 price target (up from $66.00) on shares of Applied Digital in a report on Monday, August 3rd. Needham & Company LLC dropped their price target on Applied Digital from $83.00 to $70.00 and set a "buy" rating for the company in a research report on Thursday, October 8th. Wall Street Zen downgraded Applied Digital from a "sell" rating to a "strong sell" rating in a research report on Sunday, August 30th. Finally, Zacks Research lowered Applied Digital from a "hold" rating to a "strong sell" rating in a report on Wednesday, August 26th. Three equities research analysts have rated the stock with a Strong Buy rating, twelve have issued a Buy rating, two have given a Hold rating and two have issued a Sell rating to the stock. According to data from MarketBeat.com, the company currently has a consensus rating of "Moderate Buy" and a consensus price target of $59.75.

Applied Digital Stock Performance

The company's 50-day moving average price is $25.51 and its two-hundred day moving average price is $32.26. The company has a debt-to-equity ratio of 3.90, a quick ratio of 2.56 and a current ratio of 2.56. The stock has a market cap of $5.77 billion, a PE ratio of -11.64 and a beta of 5.99.

Applied Digital (NASDAQ:APLD - Get Free Report) last announced its earnings results on Wednesday, October 7th. The company reported ($0.01) earnings per share (EPS) for the quarter, topping the consensus estimate of ($0.30) by $0.29. The company had revenue of $300.39 million during the quarter, compared to analyst estimates of $116.29 million. Applied Digital had a negative net margin of 51.28% and a negative return on equity of 27.21%. The firm's quarterly revenue was up 367.8% compared to the same quarter last year. During the same period in the previous year, the business earned ($0.03) earnings per share. On average, equities research analysts forecast that Applied Digital Corporation will post -2.06 EPS for the current year.

Insider Buying and Selling

In other news, President Jason Gechen Zhang purchased 300,000 shares of the company's stock in a transaction on Friday, October 16th. The stock was acquired at an average price of $18.86 per share, with a total value of $5,658,000.00. Following the transaction, the president directly owned 2,839,227 shares of the company's stock, valued at approximately $53,547,821.22. This represents a 11.81% increase in their position. The acquisition was disclosed in a legal filing with the Securities & Exchange Commission, which is available at the SEC website. Also, CEO Wes Cummins acquired 55,803 shares of the stock in a transaction dated Friday, October 16th. The shares were purchased at an average cost of $18.04 per share, with a total value of $1,006,686.12. Following the completion of the purchase, the chief executive officer owned 5,874,453 shares of the company's stock, valued at approximately $105,975,132.12. The trade was a 0.96% increase in their position. The disclosure for this purchase is available in the SEC filing. 9.50% of the stock is owned by corporate insiders.

Institutional Inflows and Outflows

Several institutional investors have recently added to or reduced their stakes in APLD. FNY Investment Advisers LLC purchased a new position in shares of Applied Digital in the 2nd quarter valued at approximately $37,000. Bartlett & CO. Wealth Management LLC increased its holdings in Applied Digital by 244.3% in the 1st quarter. Bartlett & CO. Wealth Management LLC now owns 1,205 shares of the company's stock worth $29,000 after buying an additional 855 shares in the last quarter. Ancora Advisors LLC purchased a new stake in Applied Digital in the second quarter worth approximately $56,000. Creative Financial Designs Inc. ADV lifted its holdings in shares of Applied Digital by 691.8% during the 2nd quarter. Creative Financial Designs Inc. ADV now owns 1,536 shares of the company's stock valued at $57,000 after buying an additional 1,342 shares during the period. Finally, GAMMA Investing LLC increased its position in Applied Digital by 28.5% during the second quarter. GAMMA Investing LLC now owns 2,092 shares of the company's stock valued at $78,000 after acquiring an additional 464 shares during the last quarter. 65.67% of the stock is currently owned by institutional investors.

About Applied Digital

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.

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