APLD - Applied Digital: A Growing List Of Challenges
2024-04-12 14:10:55 ET
Summary
- Applied Digital just had its worst quarter in at least two years, highlighted by negative gross profit and a $34 million operating loss.
- The company's Ellendale facility is operating at just 14% capacity and revenue generating GPU guidance has fallen from 10k by May to just 6-8K.
- Selling the Bitcoin mining business to Marathon Digital is likely a signal of a distressed business. Shorts haven't even begun to close yet. I'm personally staying out of the way.
It has been nearly 10 months since I last covered Applied Digital Corporation ( APLD ) for Seeking Alpha. It's a stock that I've written about a handful of times over the last two years or so, and my track record on timing calls has proven pretty good. After flipping from cautious to bullish in March 2023 , I quickly flipped back to cautious in May in response to the stock rallying over 300% from my "buy" call just two months prior. This is what I said last May:
Applied Digital: A Growing List Of ChallengesI sold some of my APLD shares following the AI revenue announcement on May 16 and then I sold a little bit more after seeing the prospectus and the shelf offering disclosures. I haven't sold it all. I'm still long APLD shares. But I suspect we're going to see a reversion back to previous share price levels and it could happen fairly quickly. APLD has benefited from momentum traders chasing the artificial intelligence narrative. Beyond that, the company's executives and insiders could be preparing to sell the rip.