Applied Digital Faces Challenges Amid Market Weakness
Written by Emily J. Thompson, Senior Investment Analyst
Updated: Jun 23 2024
0mins
Should l Buy APLD?
Source: Coinmarketcap
Applied Digital Corp's stock fell 5.05% as it crossed below the 20-day SMA, reflecting broader market weakness with the Nasdaq-100 down 1.72% and the S&P 500 down 1.09%.
The decline in stock price comes amid concerns over the company's significant debt, which surged to $2.6 billion, and its heavy reliance on CoreWeave for future revenue. Despite a strong revenue growth of 250% year-over-year in Q2 2023, the lack of profitability and potential construction delays have raised investor concerns. Analysts remain optimistic about the long-term growth potential, but the current financial risks are weighing heavily on the stock.
Investors are advised to monitor the company's debt levels and customer dependency closely, as these factors could significantly impact Applied Digital's future performance in the rapidly growing AI data center market.
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Analyst Views on APLD
Wall Street analysts forecast APLD stock price to rise
10 Analyst Rating
10 Buy
0 Hold
0 Sell
Strong Buy
Current: 31.910
Low
36.00
Averages
52.22
High
99.00
Current: 31.910
Low
36.00
Averages
52.22
High
99.00
About APLD
Applied Digital Corporation is a designer, builder, and operator of sustainably engineered data centers and colocation services for artificial intelligence, cloud, networking, and blockchain workloads. The Company’s segments include data center hosting (Data Center Hosting Business) and high-performance compute hosting (HPC Hosting Business). The Data Center Hosting Business operates data centers to provide energized space to crypto mining customers. Customer-owned hardware is installed in its facilities, and the Company provides operational and maintenance services for a fixed fee. Its facilities include a 106 megawatt (MW) facility in Jamestown and a 180 MW facility in Ellendale, North Dakota. The HPC Hosting Business designs, builds, and operates data centers which are designed to support high-compute applications using advanced technologies and infrastructures to provide services to customers. Its HPC data center is located at its Polaris Forge 1 campus with 100 MW capacity.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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- Price Performance Review: Over the past 12 months, Applied Digital's stock surged by 240%, yet it currently trades 7.2% below its 20-day SMA and 3.7% above its 50-day SMA, indicating recent underperformance and cautious investor sentiment regarding future trends.
- Technical Indicator Analysis: The current RSI stands at 48.21, suggesting neutral market momentum, while the MACD is below its signal line, indicating bearish pressure, reflecting investor uncertainty about the stock's short-term direction.
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- Guidance Downgrade: Palo Alto lowered its full-year adjusted earnings guidance from a range of $3.80 to $3.90 per share to a new range of $3.65 to $3.70, below the market estimate of $3.86, which may impact investor confidence.
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