What happened

Is the stock of Applied Digital (APLD -1.72%) set for a monster fall?

Two bearish pundits would surely answer an emphatic "yes" to that question. On Thursday, the pair weighed in negatively on the company, and as a result the share price of the data center operator cratered by more than 14%. 

So what

The first pundit was Edwin Dorsey, the man behind The Bear Cave newsletter. As its name implies, the Substack platform's feed details what Dorsey believes to be the shareholder value-draining moves of notable companies. On Thursday, he focused his ire on Applied Digital.

In a post on the company, Dorsey pointed out that today's Applied Digital is the latest in a chain of businesses that have made significant pivots. According to him, it started as a staffing service for film and TV production, then shifted into other activities before taking on its current name and data center focus in late 2022.

Dorsey wrote that he "believes Applied Digital relies on puffery over substance ... ."

Now what

The second hit on the company came from self-described "short activist" Wolfpack Research. In a report issued on Thursday, Wolfpack essentially said management is capitalizing on the surge in popularity of stocks associated with artificial intelligence (AI) even though it is not an AI company.

Wolfpack wrote that in May, Applied Digital claimed to pivot from being a floundering business hosting bitcoin miners, to becoming a low-cost AI cloud service provider.

Reuters quoted Applied Digital as saying that "We strongly disagree with the conclusions drawn in the report." It said that it was not contacted by Wolfpack for any input.