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Tuesday, July 23, 2024

My Thoughts on APLD Stock Price and Forecast

What I think about APLD:

Technical Analysis:

APLD is in a daily downtrend, in order for it to continue to the upside it would need to break the 8.65 Level. Based on the past earnings transcript, I don’t see it breaking above that resistance. Because of the current trend, I see APLD hitting its 4$ support level and stagnating around that area, at least until the next earnings report.

If the earnings for Q4 show higher revenue and earnings it could potentially reach the analyst’s price target of ~8$. But for now, I don’t see upside potential until we get a break from that downtrend.

APLD Stock Chart

Key points from Applied Digital’s fiscal Q3 2024 earnings call:

You can read the last earnings call transcript here.

Financial Performance:

  • Revenue was $43.3 million, up from $14.1 million in Q3 2023
  • Reported an adjusted EBITDA loss of $2.3 million
  • Net loss of $62.8 million or $0.52 per share

Operational Challenges:

  • Experienced power outages at the Ellendale facility, impacting financial performance
  • Ellendale facility currently operating at 14% capacity, expected to reach 65-75% by end of May 2024
  • Pursuing remedies to recoup lost revenues and additional costs

Strategic Developments:

  • Entered exclusivity and executed LOI with a US-based hyperscaler for 400 MW capacity at Ellendale campus
  • Made strategic decision to sell Garden City facility
  • Welcomed new cloud service customer, Together AI

Business Segments:

  • Data Center Hosting: $37.7 million revenue
  • Cloud Services: $5.6 million revenue, with expected growth in Q4
  • HPC Data Centers: Continued progress on 100 MW facility in Ellendale

Capital Strategy:

  • Working on securing a large debt facility for cloud services subsidiary
  • Pursuing project-level financing for HPC data center
  • Strengthened balance sheet with $160 million in asset sales and financing transactions

Future Outlook:

  • Confident in growth trajectory despite recent challenges
  • Focusing on high-growth segments of cloud services and HPC data centers
  • Expecting positive inflection in revenue and EBITDA in fiscal Q4

Recent price target changes and reiterations for APLD stock by various analysts:

B. Riley (June 28, 2024):

  • Maintained “Buy” rating
  • Increased price target from $6.00 to $8.00

Roth Mkm (June 24, 2024):

  • Maintained “Buy” rating
  • Raised price target from $8.00 to $11.00

Needham & Company LLC (June 14, 2024):

  • Reiterated “Buy” rating
  • Maintained price target at $11.00

HC Wainwright (June 12, 2024):

  • Reiterated “Buy” rating
  • Maintained price target at $5.00

Lake Street Capital (April 12, 2024):

  • Maintained “Buy” rating
  • Lowered price target from $19.00 to $7.00

Overall, the trend shows that most analysts maintain a “Buy” rating on APLD stock. There’s a mix of price target adjustments, with some analysts raising their targets (B. Riley and Roth Mkm), others maintaining them (Needham & Company LLC and HC Wainwright), and one significantly lowering its target (Lake Street Capital).

The current price targets range from $5.00 to $11.00, with the majority clustering around the $7.00 to $11.00 range. This suggests that analysts generally have a positive outlook on the stock’s potential, despite the significant reduction in Lake Street Capital’s target earlier in the year.

Lazarus Lucas is the Publisher, editor, and creator of LJLNews. Stock Market enthusiast, with an interest for politics. Independent trader, analyst, and asset manager. Lazarus publishes articles on LJLNews with technical analysis on various markets, such as currencies, stocks, and commodities. Contact: Lazaruslucas@ljlnews.com

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