Applied Digital (NASDAQ:APLD) Stock Falls 6.6% – Here’s Why

Applied Digital Corporation (NASDAQ:APLD) traded down 6.6% on Monday. The stock traded as low as $24.50 and last traded at $24.53. 14,866,387 shares traded hands during mid-day trading, a decline of 34% from the average daily volume of 22,649,252 shares. The stock had previously closed at $26.25.

Applied Digital News Summary

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

• Positive Sentiment: Applied Digital has reported rapid expansion in its data-center business, including a contracted backlog reportedly reaching approximately $31 billion. Jones Trading initiated coverage with a Buy rating and a $70 price target, while several analysts maintain targets between $60 and $90. Jones Trading Applied Digital coverage Applied Digital contracted backlog
• Positive Sentiment: Institutional interest remains substantial: 333 investors increased their positions in the latest quarter, with notable additions from Two Sigma, Equitec, Oasis Management and Norges Bank. This suggests continued hedge-fund interest in the AI-infrastructure theme, although other large institutions reduced holdings.
• Neutral Sentiment: The company will release fiscal first-quarter 2027 results after the market closes on October 7 and hold its conference call at 5:00 p.m. Eastern time. The report is a major near-term catalyst because investors will look for progress on backlog conversion, customer contracts, financing and data-center construction. Applied Digital earnings conference call
• Negative Sentiment: Analyst opinion is divided ahead of earnings. Zacks added APLD to its Rank #5 “Strong Sell” list, contrasting with the bullish price targets and recent Buy initiation. Conflicting recommendations can increase volatility and encourage investors to reduce exposure before results. Zacks Strong Sell list
• Negative Sentiment: Investors are questioning whether the valuation is justified after a roughly 300% three-year share-price gain and potential lease commitments of about $36 billion. The company also reportedly has 56% of its contracts tied to one customer, creating concentration risk. Applied Digital valuation and leases Applied Digital customer concentration
• Negative Sentiment: A recently filed prospectus allowing selling stockholders to offer up to 53.1 million shares has raised potential supply and dilution-overhang concerns. Four insider sales and a complex, highly leveraged capital structure add to caution. Applied Digital’s prior quarter also showed a sizable EPS miss despite strong revenue growth, underscoring execution risk.

Analyst Upgrades and Downgrades

Several research analysts have recently weighed in on the stock. Craig Hallum upped their target price on shares of Applied Digital from $75.00 to $79.00 and gave the company a “buy” rating in a research note on Tuesday, June 9th. Needham & Company LLC reiterated a “buy” rating and set a $83.00 target price on shares of Applied Digital in a research note on Tuesday, July 28th. Weiss Ratings reissued a “sell (d-)” rating on shares of Applied Digital in a report on Tuesday, July 21st. Zacks Research cut Applied Digital from a “hold” rating to a “strong sell” rating in a research note on Wednesday, August 26th. Finally, B. Riley Financial restated a “buy” rating and set a $75.00 price objective (up from $66.00) on shares of Applied Digital in a research note on Monday, August 3rd. Three investment analysts have rated the stock with a Strong Buy rating, thirteen have assigned a Buy rating, two have given a Hold rating and two have given a Sell rating to the company. According to MarketBeat, the stock currently has a consensus rating of “Moderate Buy” and an average price target of $60.88.

Applied Digital Trading Up 3.6%

The business’s 50 day moving average price is $27.47 and its two-hundred day moving average price is $32.65. The company has a debt-to-equity ratio of 2.88, a quick ratio of 4.01 and a current ratio of 4.01. The company has a market capitalization of $7.41 billion, a price-to-earnings ratio of -28.55 and a beta of 5.72.

Applied Digital (NASDAQ:APLD) last announced its earnings results on Monday, July 27th. The company reported ($0.39) EPS for the quarter, missing the consensus estimate of ($0.09) by ($0.30). The firm had revenue of $240.35 million for the quarter, compared to the consensus estimate of $96.85 million. Applied Digital had a negative return on equity of 16.42% and a negative net margin of 37.78%.Applied Digital’s revenue for the quarter was up 406.3% on a year-over-year basis. During the same period in the previous year, the firm earned ($0.24) EPS. Equities analysts forecast that Applied Digital Corporation will post -1.09 earnings per share for the current fiscal year.

Insiders Place Their Bets

In related news, Director Richard Nottenburg sold 75,000 shares of the firm’s stock in a transaction dated 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 completion of the transaction, the director owned 133,378 shares of the company’s stock, valued at $4,154,724.70. This trade represents a 35.99% decrease in their ownership of the stock. The sale was disclosed in a filing with the SEC, which is available through the SEC website. 9.50% of the stock is owned by corporate insiders.

Hedge Funds Weigh In On Applied Digital

Several hedge funds have recently made changes to their positions in the business. Whitaker Myers Wealth Managers LTD. acquired a new position in Applied Digital in the second quarter worth approximately $1,841,000. Cambridge Investment Research Advisors Inc. increased its holdings in shares of Applied Digital by 39.6% in the second quarter. Cambridge Investment Research Advisors Inc. now owns 146,633 shares of the company’s stock valued at $5,469,000 after buying an additional 41,562 shares in the last quarter. Dimensional Fund Advisors LP acquired a new stake in shares of Applied Digital during the 1st quarter valued at $1,970,000. Situational Awareness LP lifted its position in shares of Applied Digital by 14.1% during the 2nd quarter. Situational Awareness LP now owns 15,384,616 shares of the company’s stock valued at $574,000 after acquiring an additional 1,906,178 shares during the last quarter. Finally, TFR Capital LLC. boosted its stake in shares of Applied Digital by 425.3% during the 1st quarter. TFR Capital LLC. now owns 372,960 shares of the company’s stock worth $9,497,000 after acquiring an additional 301,954 shares in the last quarter. Institutional investors and hedge funds 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, artificial intelligence and other data-intensive applications. The company provides data-center capacity and related services to customers that require substantial computing power and electricity.

The company’s business has included hosting infrastructure for cryptocurrency-mining operations and, increasingly, developing facilities for artificial intelligence and high-performance computing workloads.