Value
6.4/10data confidence 20%| Component | Sub-score |
|---|---|
| P/S | 6.4 |
APLD · Why this verdict
Why Applied Digital (APLD) is rated SELL
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results. How we score · Editorial policy
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VerdictSELL
Overall score4.6/10
ConfidenceMEDIUM
MacroNEUTRAL
TrendMatrix Research · core thesis
Engine thesis — one sentence
Applied Digital is a speculative, cash-burning data-center services company with improving earnings surprises and an industry-leading growth rank, but 59% customer concentration, a 65% drawdown, weak quality and 24% short interest dominate the risk profile.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
One customer accounts for 59% of total revenue, a high-severity concentration risk. Bear case | Customer concentration falls below 50% of revenue as new tenants are added over 12 months. | →Stable |
| CounterLosing or renegotiating the single largest customer would cut most of the revenue base. | ||
Free cash flow is -491% of revenue, ROE and margins score near zero, and quality scores 2.0 against a 4.0 floor, with no competitive moat. Quality breakdown | Free cash flow burn narrows below -200% of revenue as projects reach operation. | →Stable |
| CounterA business that burns far more cash than it earns must keep raising capital, diluting shareholders or adding debt. | ||
Applied Digital ranks as an industry growth leader, with a growth rank of 9.5/10 against peers. Peer-rank breakdown | Growth rank stays above 8.0 as revenue ramps over 12 months. | →Stable |
| CounterPeer-relative growth does not guarantee profits, since value and quality ranks sit below 1.0. | ||
Applied Digital beat EPS estimates in each of the last 3 reported quarters, with the loss narrowing to -$0.01 in October 2026 and EPS of $0.04 and $0.09 in the prior two quarters. Earnings | EPS stays positive or near break-even at the report due 2027-01-06. | →Stable |
| CounterEPS around zero against very negative estimates reflects low expectations, and underlying operating margin is only 0.4%. | ||
The price is below a falling 200-day average (slope -3.0% per 30 days) after a 65% drawdown, with 24% short interest and 125% implied volatility. Risk breakdown | The price stabilizes above the $16.68 stop and short interest falls below 20%. | Tripped→Stable |
| CounterHeavy short interest, high volatility and insider selling of $3.0M point to continued downside pressure. | ||
One customer accounts for 59% of total revenue, a high-severity concentration risk.
→StableBear case
- Expectation
- Customer concentration falls below 50% of revenue as new tenants are added over 12 months.
CounterLosing or renegotiating the single largest customer would cut most of the revenue base.
Free cash flow is -491% of revenue, ROE and margins score near zero, and quality scores 2.0 against a 4.0 floor, with no competitive moat.
→StableQuality breakdown
- Expectation
- Free cash flow burn narrows below -200% of revenue as projects reach operation.
CounterA business that burns far more cash than it earns must keep raising capital, diluting shareholders or adding debt.
Applied Digital ranks as an industry growth leader, with a growth rank of 9.5/10 against peers.
→StablePeer-rank breakdown
- Expectation
- Growth rank stays above 8.0 as revenue ramps over 12 months.
CounterPeer-relative growth does not guarantee profits, since value and quality ranks sit below 1.0.
Applied Digital beat EPS estimates in each of the last 3 reported quarters, with the loss narrowing to -$0.01 in October 2026 and EPS of $0.04 and $0.09 in the prior two quarters.
→StableEarnings
- Expectation
- EPS stays positive or near break-even at the report due 2027-01-06.
CounterEPS around zero against very negative estimates reflects low expectations, and underlying operating margin is only 0.4%.
The price is below a falling 200-day average (slope -3.0% per 30 days) after a 65% drawdown, with 24% short interest and 125% implied volatility.
Tripped→StableRisk breakdown
- Expectation
- The price stabilizes above the $16.68 stop and short interest falls below 20%.
CounterHeavy short interest, high volatility and insider selling of $3.0M point to continued downside pressure.
Per-dimension breakdown
Quality
2.0/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 0.0 |
| ROA | 0.0 |
| Gross margin | 0.3 |
| Op margin | 0.0 |
| Net margin | 0.0 |
| Current ratio | 8.7 |
| FCF quality | 0.0 |
| Moat | 4.2 |
| Piotroski F | 4.4 |
- ▸Cash-burning: FCF -491% of revenue
- ▸No competitive moat
- ▸Quality concerns
Growth
5.0/10data confidence 50%Momentum
1.8/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 3.5 |
| MACD | 0.0 |
| OBV | 1.0 |
| MA position | 1.0 |
| Volume | 3.6 |
- ▸Volume distribution (falling OBV)
- ▸Below 200-MA, MA slope -4.1%/30d — confirmed downtrend
Sentiment
7.6/10data confidence 100%| Component | Sub-score |
|---|---|
| LLM sentiment | 4.2 |
| Analyst rating | 8.7 |
| Price target | 10.0 |
- ▸Analyst upside: 335%
Insider
4.6/10data confidence 75%| Component | Sub-score |
|---|---|
| materiality | 5.0 |
| holder change | 3.8 |
| notable moves | 5.0 |
- ▸Insider selling (low materiality) — $682,500 (0.014% of mkt cap)
Peer rank
3.4/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 1.0 |
| quality rank | 0.9 |
| growth rank | 9.5 |
- ▸Industry growth leader
Technical
6.5/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 10.0 |
| support resistance | 9.2 |
| 52w position | 0.0 |
| gap | 7.0 |
Risk (lower is worse)
3.5/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 1.1 |
| days to cover | 7.9 |
| volatility | 0.0 |
| put call | 8.9 |
| implied vol | 0.0 |
| max pain risk | 3.0 |
| debt equity | 3.6 |
- ▸High short interest justified: 24%
- ▸High IV: 144%
- ▸Above max pain $1
- ▸Concentration risks: 1 HIGH, 2 MED (10-K Item 1A — sized via position_sizing, validated via buy_confidence)
Catalyst
7.6/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 10.0 |
| earnings timing | 5.0 |
| surprise avg | 10.0 |
| news activity | 8.0 |
- ▸Strong earnings: 3B/0M
How the verdict was assembled
Engine trigger
Quality below minimum threshold.
Engine technical detail
verdict_path:
L1:HARD_BLOCK:QUALITY_FLOORPassed (6)
- INSIDER:OK
- 8K:CLEAN
- NEWS_EVENTS:NONE_RECENT
- EARNINGS_PROXIMITY:62d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (2)
- MOMENTUM:1.8<4.5
- DEATH_CROSS:HARD_BLOCK
Warning (1)
- ASYMMETRY:UPSIDE_EXHAUSTED (upside=0.0%)
Reward-to-Risk
0.00
Upside
+68.7%
Downside
15.0%
Sizing output
AVOID
SetupFalling Knife — Death cross, below all MAs, RSI 39, MACD bearish
EdgeNo clear edge — No clear edge identified
SuitabilitySpeculative — Drawdown -72% (>40% off 52w high)
Investment implication
The SELL_IF_HOLDING verdict reflects the MOMENTUM gate's 1.8<4.5 outcome against Sentiment at 7.6 and asymmetric R:R of 0.00.
The strongest dimensions are Sentiment at 7.6, Catalyst at 7.6, and Technical at 6.5; the weakest are Momentum at 1.8, Quality at 2.0, and Peer rank at 3.4. The V9 engine flagged 2 failed gates with 1 warning, producing an asymmetric reward-to-risk of 0.00 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Improving Earnings Surprises
Trip ifEPS surprise stays below 0% for 2 consecutive quarters.
- P2Customer Concentration Risk
Trip ifCustomer concentration stays above 59% of revenue for 4 more quarters.
- P3Cash Burning Low Quality
Trip ifFree cash flow stays below -300% of revenue for 2 more quarters.
- P4Industry Growth Leader
Trip ifGrowth rank falls below 6.0 from current 9.5.
- P5Downtrend And Short InterestTripped
Trip ifPrice falls below the $16.68 stop level.