DALLAS - Applied Digital Corporation (NASDAQ:APLD), a company specializing in the design, construction, and operation of digital infrastructure for High-Performance Computing (HPC) applications, has announced a $160 million private placement financing. The investment, priced at market value, involves institutional and accredited investors, including NVIDIA (NASDAQ:NVDA) and Related Companies, a leader in real estate and data center development.
This strategic investment highlights Applied Digital's role as a key player in the accelerated compute space and bolsters its financial foundation to scale up its data center and GPU cloud solutions. The company is currently constructing one of the world's largest data centers and developing an additional 300MW of data center capacity. These initiatives are supported by a combination of specialized talent, access to stranded power, and advanced technologies like closed-loop liquid cooling, aiming to provide a hyper-efficient platform for advanced HPC and AI workloads.
Applied Digital, a Preferred NVIDIA Cloud Partner, continues to push the envelope in data center and cloud computing technology. The company is recognized for its ability to meet market demands through a combination of philosophy, technical expertise, and industry experience.
Wes Cummins (NYSE:CMI), CEO and Chairman of Applied Digital, expressed confidence in the company's direction and the support from NVIDIA, Related Companies, and other investors. Cummins emphasized the company's commitment to delivering high-capacity, liquid-cooled IT environments optimized for AI, HPC, and other accelerated computing tasks.
In this private placement, Applied Digital agreed to issue approximately 49.4 million shares of common stock at $3.24 per share, equivalent to the last closing price on September 4, 2024. The transaction is subject to customary closing conditions, with further details to be disclosed in a forthcoming Form 8-K filing with the Securities and Exchange Commission.
Goldman Sachs & Co. LLC is the exclusive placement agent, and Lowenstein Sandler LLP is the legal adviser for this private placement. Applied Digital's growth strategy is reflected in its ongoing projects and partnerships, positioning it as a significant force in the HPC industry.
The securities offered have not been registered under the Securities Act of 1933 and are subject to specific exemptions from registration. Applied Digital has committed to filing a resale registration statement with the SEC for the shares involved in this placement.
This news is based on a press release statement and does not constitute an offer to sell or a solicitation of an offer to buy any securities.
In other recent news, Applied Digital Corporation raised $50 million through a private financing deal, which will support the expansion of the company and the construction of its Ellendale High-Performance Computing (HPC) data center. The company issued convertible preferred stock valued at $1,000 per share, with an 8% interest rate. The company plans to allocate the investment towards growth initiatives across its business segments.
Simultaneously, Applied Blockchain Inc reported impressive earnings of $43.3 million for the quarter, surpassing both the previous quarter's $40.3 million and market expectations of $37.6 million. H.C. Wainwright maintained a Buy rating and a price target of $5.00 for the company, while Roth/MKM adjusted Applied Blockchain's price target to $10.
Applied Digital also reported a substantial rise in Q4 revenues to $43.7 million from $22 million year-over-year. However, the company's net loss widened to $64.8 million from $6.5 million in the same quarter last year. These recent developments highlight the strategic progress of both companies, with Applied Blockchain's growth depending on finalizing a formal lease agreement and securing potential project financing. Similarly, Applied Digital is nearing the completion of a lease agreement with a hyperscaler and expects sequential revenue improvements in the coming quarter.
InvestingPro Insights
As Applied Digital Corporation (NASDAQ:APLD) embarks on its ambitious expansion of data center capacity, it's important for investors to keep a close eye on the company's financial health and market performance. According to InvestingPro data, Applied Digital has a market capitalization of $493.79 million, indicating its relative size in the industry. Despite a challenging market environment, analysts are anticipating sales growth, as reflected in the impressive 198.92% revenue growth over the last twelve months as of Q4 2024.
However, InvestingPro Tips suggest caution: Applied Digital operates with a significant debt burden and is quickly burning through cash, which could impact its ability to sustain long-term growth. Additionally, the stock has experienced high volatility, with price swings that may concern risk-averse investors. Specifically, the stock has taken a considerable hit over the last week, with a -15.18% price total return, and has fared poorly over the last month with -18.39% returns.
Investors following Applied Digital may also note that the company's stock trades with high price volatility, which could present opportunities for those with an appetite for risk but may be a red flag for those seeking stability. For a more comprehensive understanding of Applied Digital's financial outlook, investors can explore the 16 additional InvestingPro Tips available at https://www.investing.com/pro/APLD.
Moreover, the company's P/E ratio stands at -2.79, and the adjusted P/E ratio for the last twelve months as of Q4 2024 is -4.34, indicating that the company is not currently profitable. This aligns with the analysts' expectations that Applied Digital will not be profitable this year. The valuation also implies a poor free cash flow yield, which is a concern for investors looking for companies with strong cash generation capabilities.
Keeping these insights in mind could be crucial for stakeholders and potential investors as they assess Applied Digital's financial trajectory and its role in the evolving landscape of High-Performance Computing and AI technologies.
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