Applied Digital (NASDAQ:APLD) Stock Price Down 4.4% – Should You Sell?

Applied Digital Corporation (NASDAQ:APLD) shares were down 4.4% on Friday. The stock traded as low as $18.14 and last traded at $18.25. Approximately 18,009,333 shares changed hands during trading, a decline of 22% from the average daily 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

APLD has been the subject of several research reports. Needham & Company LLC reduced their price target on shares of Applied Digital from $83.00 to $70.00 and set a “buy” rating for the company in a research report on Thursday, October 8th. Rothschild & Co Redburn set a $22.00 price objective on Applied Digital and gave the stock a “neutral” rating in a research note on Monday, September 21st. Roth Capital set a $35.00 target price on shares of Applied Digital and gave the stock a “buy” rating in a research note on Wednesday. Morgan Stanley set a $41.00 price objective on shares of Applied Digital and gave the stock an “equal weight” rating in a research note on Friday, October 9th. Finally, Zacks Research lowered Applied Digital from a “hold” rating to a “strong sell” rating in a research note on Wednesday, August 26th. Three investment 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. Based on data from MarketBeat, Applied Digital has a consensus rating of “Moderate Buy” and an average price target of $59.75.

Applied Digital Stock Down 4.4%

The firm has a market capitalization of $5.52 billion, a PE ratio of -11.13 and a beta of 5.99. The business’s 50 day simple moving average is $25.28 and its 200 day simple moving average is $32.22. The company has a current ratio of 2.56, a quick ratio of 2.56 and a debt-to-equity ratio of 3.90.

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. The business had revenue of $300.39 million for the quarter, compared to analysts’ expectations of $116.29 million. Applied Digital had a negative net margin of 51.28% and a negative return on equity of 27.21%. The business’s revenue was up 367.8% compared to the same quarter last year. During the same quarter in the previous year, the business posted ($0.03) earnings per share. On average, equities research analysts forecast that Applied Digital Corporation will post -2.06 earnings per share for the current year.

Insider Transactions at Applied Digital

In related news, President Jason Gechen Zhang purchased 300,000 shares of Applied Digital stock in a transaction dated Friday, October 16th. The stock was purchased at an average cost of $18.86 per share, with a total value of $5,658,000.00. Following the transaction, the president owned 2,839,227 shares in the company, valued at approximately $53,547,821.22. The trade was a 11.81% increase in their position. The purchase was disclosed in a document filed with the Securities & Exchange Commission, which can be accessed through this hyperlink. Also, CEO Wes Cummins acquired 55,803 shares of the stock in a transaction dated Friday, October 16th. The stock was acquired at an average cost of $18.04 per share, with a total value of $1,006,686.12. Following the transaction, the chief executive officer directly owned 5,874,453 shares in the company, valued at approximately $105,975,132.12. This represents a 0.96% increase in their ownership of the stock. Additional details regarding this purchase are available in the official SEC disclosure. Corporate insiders own 9.50% of the company’s stock.

Hedge Funds Weigh In On Applied Digital

Hedge funds and other institutional investors have recently bought and sold shares of the business. Situational Awareness LP lifted its position in Applied Digital by 18.9% during the first quarter. Situational Awareness LP now owns 13,478,438 shares of the company’s stock valued at $319,978,000 after purchasing an additional 2,139,378 shares during the period. Equitec Proprietary Markets LLC acquired a new position in shares of Applied Digital in the 2nd quarter valued at about $312,349,000. Hsbc Holdings PLC acquired a new stake in Applied Digital during the fourth quarter worth about $29,510,000. Sei Investments Co. grew its holdings in Applied Digital by 33.0% during the first 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 during the period. Finally, UBS AM a distinct business unit of UBS ASSET MANAGEMENT AMERICAS LLC raised its position in Applied Digital by 32.7% during the second quarter. UBS AM a distinct business unit of UBS ASSET MANAGEMENT AMERICAS LLC now owns 581,255 shares of the company’s stock valued at $21,681,000 after acquiring an additional 143,308 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 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.