So let me get this straight. Applied Digital, a company I’m pretty sure half the people buying it couldn't describe if their portfolio depended on it, pops 10% at the open. Why? Because some analyst at a place called Roth Capital decided the number $24 was boring and the number $43 was more exciting.
That’s it. That’s the news.
Darren Afthai. That's the analyst's name. I imagine him waking up, staring at his spreadsheet, and thinking, "You know what? This stock isn't expensive enough." So he slaps a new price target on APLD that implies it should be worth 52% more than it already is. A stock that, by the way, is already up a ridiculous 251% this year.
This is sanity. This is a rational market.
When Bad News Becomes a "Buy" Signal
The Digital Gold Rush is Getting Stupid
And offcourse, the internet loses its collective mind. You look over at Stocktwits, and it’s a full-blown party. APLD is a top-five trending ticker. Message volume is up over 1,400% in a month. Every post is just rocket emojis and "to the moon!" declarations from guys who probably think "revenue" is a fancy French appetizer.
The sentiment is "bullish." Of course it's bullish. When the only tool you have is a "Buy" button, every problem looks like a dip.
But let’s pull our heads out of the clouds for one second and look at the actual numbers they’re about to report on October 9. The consensus on Wall Street—the same Wall Street that's cheering this thing on—is that Applied Digital is going to post a loss of $0.15 per share for the quarter.
Let me repeat that. They are expected to lose money.
A year ago, in the same quarter, they lost $0.03 per share on revenue of $60.7 million. This quarter, they’re expected to lose five times as much per share on less revenue—around $47 million. This is a bad look. No, 'bad' doesn't cover it—this is a five-alarm dumpster fire of a trendline. The business is going in the wrong direction, but the stock is hitting highs not seen in nearly four years.
What am I missing here? Is losing more money on less revenue the new secret to a 200%+ stock gain? Maybe I’m just an old man yelling at a cloud. Maybe I just don’t "get" the new paradigm where profits are optional and hype is the only asset that matters.
Is This Investing or Just High-Stakes Story Time?
Selling a Story, Not a Stock
The whole bull case seems to hang on this shimmering mirage of AI and High-Performance Computing (HPC). Applied Digital builds the infrastructure for it. Great. So do a lot of companies. But the hype train needs fuel, and today's fuel is a "potential new HPC colocation deal" for one of their sites.
A potential deal.
One that this analyst, Mr. Afthai, thinks might happen by the end of 2025. Or maybe early 2026. So we’re bidding up the stock today, in October 2024, based on a handshake that might not even materialize for another two years. This is the financial equivalent of swiping right on a dating profile from 2017. The person you meet probably won't look anything like the picture.
It's exhausting. It really is. Every day you see this stuff, and the financial media just parrots it. "APLD Surges on Analyst Upgrade!" they'll headline it. They never add the second part of the sentence: "...Despite Fundamentals That Would Make a Mob Accountant Blush." It’s just cheerleading, a constant stream of noise designed to create action, to get you to click, to trade, to churn. It ain't journalism.
They just want to keep the machine humming, keep the commissions flowing, keep the illusion of growth alive because the alternative is admitting that much of this is just gambling with extra steps. They expect everyone to just nod along with the insanity, and honestly...
This isn't about Applied Digital anymore. It’s about a market that has become completely detached from reality, a casino where the house whispers "AI" and everyone throws their chips on the table without even looking at their cards. The stock is being bought not on what the company is, but on a vague, buzzword-filled dream of what it could be. And dreams, as we all know, have a nasty habit of vanishing when the sun comes up.
So, We're Just Pretending Now? ###
Look, I don’t know if APLD will hit $43 or go to zero. Nobody does. But what I do know is that this price action has nothing to do with value and everything to do with momentum and narrative. We're not investing; we're chasing stories. And right now, this is a great story with a terrible balance sheet, and the market has decided it only cares about the former. Good luck with that.
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