APLD Stock Drops Sharply Ahead of Applied Digital Q4 Earnings Call
After a volatile surge tied to its high-profile CoreWeave deal, Applied Digital stock is again under pressure, exposing deeper investor...
Quick overview
- Applied Digital stock has faced renewed pressure following a volatile surge tied to its CoreWeave deal, dropping nearly 7% after a brief 30% rebound.
- Investor enthusiasm over a $7 billion hosting agreement with CoreWeave has waned, leading to skepticism about the company's execution and sustainability.
- Financial struggles persist, with a trailing EPS of -$1.47 and negative cash flow, raising concerns about profitability despite rising revenue.
- The upcoming earnings report on July 30 is critical, as investors seek clarity on CoreWeave revenue and overall financial health amid high volatility.
After a volatile surge tied to its high-profile CoreWeave deal, Applied Digital stock is again under pressure, exposing deeper investor concerns ahead of its earnings report.
CoreWeave Hype Meets Harsh Reality
Applied Digital Corporation (NASDAQ: APLD) entered Monday’s session with bullish momentum and a strong open, gapping higher at the bell. However, the optimism was short-lived. By the end of the day, the stock had tumbled nearly 7%, retracing last week’s gains and signaling renewed investor skepticism.
The selloff comes on the heels of a brief but sharp rebound that saw shares jump 30% in just one week. That surge followed a prolonged decline from June highs, where Applied Digital briefly touched $15.45 in the wake of its highly publicized deal with cloud computing firm CoreWeave.
APLD Chart Daily – Wiping Friday’s Gains
From Hype to Hesitation
In early June, Applied stunned markets by announcing a 15-year hosting agreement with CoreWeave, a leader in AI infrastructure and a key partner of Nvidia. The deal, valued at approximately $7 billion over its lifetime, would see CoreWeave lease up to 250 megawatts of data center capacity at Applied’s North Dakota facility. Investors initially reacted with enthusiasm, viewing it as a transformational agreement that could reshape the company’s trajectory.
However, the excitement quickly gave way to doubt. Within weeks, APLD shares were trading below $10, weighed down by concerns about execution, capital requirements, and the broader sustainability of the business model. By mid-July, the stock had settled near $9—erasing nearly all of its post-announcement gains.
Financial Struggles Undermine Sentiment
Adding to the pressure are Applied Digital’s ongoing financial challenges. The company posted a trailing 12-month earnings per share (EPS) of -$1.47, a stark reminder that profitability remains elusive despite headline-grabbing contracts.
Key performance metrics paint a concerning picture:
- Enterprise Value: $2.59 billion
- Price-to-Cash-Flow Ratio: Near 100 — indicating stretched valuations
- Return on Equity (ROE): A worrying -89.6%
- Free Cash Flow: Negative $2.9 million in the most recent quarter
These figures underscore persistent cash flow and liquidity issues, raising red flags for both institutional and retail investors. Despite rising revenue, the company appears to be struggling to translate top-line growth into bottom-line performance.
Earnings Call in Focus
Market participants are now eyeing Applied Digital’s upcoming fourth-quarter fiscal 2025 earnings report, scheduled for Tuesday, July 30 at 5:00 PM ET. The company has announced that a press release and investor briefing will be held on the same day, outlining both financial results and operational highlights.
With volatility already returning and sentiment fragile, the upcoming earnings report may prove pivotal. Investors will be watching closely for updates on CoreWeave revenue realization, capital spending, and any changes in profitability trends.
Conclusion: Still a High-Risk, High-Reward Play
Applied Digital’s recent performance underscores its volatile nature. The company remains one of the most talked-about names in the AI infrastructure space, but its fundamentals continue to challenge investor confidence. As the July 30 earnings date approaches, expectations are running high—but so are the risks. For now, Applied Digital may be best suited to those with a high-risk appetite and a long-term outlook.
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