What happened
Sooner or later, almost every high-flying stock obeys gravity. On Tuesday, that rule very much applied to a data center specialist pushing hard into the artificial intelligence (AI) realm, Applied Digital (APLD -2.00%). On the back of the company's release of preliminary fourth-quarter results and news of a fresh stock issue, its share price nosedived by nearly 20% on the day.
So what
For the quarter, which ended on May 31, Applied Digital disclosed in a regulatory filing that it expects to post roughly $22 million in revenue, and a net loss of around $6.8 million (approximately $0.07 per share, according to the latest share count). Non-GAAP (generally accepted accounting principles) adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) should come in between $2.7 million and $3.2 million.
On average, the clutch of analysts currently tracking Applied Digital stock is expecting slightly over $30 million in revenue and a notably narrower net loss of $0.03 per share.
In another regulatory document, Applied Digital revealed that it has entered into an at-market sales agreement to sell its common stock on the market. These sales will be made from time to time, and will tally up to $125 million worth of common shares. The funds raised will be used to "address the company's working capital needs." It did not get more specific.
Now what
Both news items taken separately would be discouraging, and the combination of the pair injected a sudden dose of pessimism into the market. Those preliminary results fell notably short of expectations, while the new share issue could be rather dilutive, considering Applied Digital's market cap is currently just over $707 million.