• While CoreWeave stock plunged over 16% on Tuesday following a guidance cut, APDN stock shed more than 9% in a sympathy move.
• Investors’ negative sentiment toward the stock may have stemmed from the rising pessimism surrounding AI spending. 
• Applied Digital announced Monday plans to raise $2.35 billion through the offering of senior secured notes.

Applied Digital Corp.’s (APLD) shares fell over 12% on Thursday amid the broader market’s tech-led sell-off, and it appears the stock could see further losses in Friday’s session.

In overnight trading, Applied Digital stock declined by more than 5%, according to Yahoo Finance. 

AI Exposure Dents Mood?

After starting the week stronger, Applied Digital’s stock has come under pressure, losing nearly 27% since Monday. It was among the top five trending equity tickers on Stocktwits as of early Friday. Week-to-date, the stock is down about 26%. If those losses sustain until Friday, APLD stock would log its worst weekly performance since early April 2024.

Investors’ negative sentiment toward the stock may have stemmed from the rising pessimism surrounding AI spending. Fund managers and Wall Street firms have sounded warnings regarding a potential bubble waiting to burst, as AI names continue to splurge on building data center clusters to train AI models and for inference. 

Fellow AI infrastructure company CoreWeave, Inc. (CRWV) reduced its outlook this week, citing a delay by a third-party data center developer. While CoreWeave stock plunged over 16% on Tuesday following the warning, APDN stock shed more than 9% in sympathy.

To make matters worse, short seller Jim Chanos called out CoreWeave for overstating the useful lifetime of its data center assets, thereby artificially inflating profits. The fear was also raised by Michael Burry, although in relation to larger hyperscalers, such as Oracle and Meta.

Debt Offering

Applied Digital announced Monday plans to raise $2.35 billion through the issuance of senior secured notes, underscoring the industry's huge capital needs. Late Thursday, the company said it has priced its offering of 9.250% senior secured notes due 2030 at an issue price of 97%.

The company stated that it anticipates using the net proceeds from the offering, which is scheduled to close on November 30, to fund a portion of the construction and associated expenses for its 100 megawatt (MW) and 150 MW data centers at its North Dakota data center campus, as well as to repay debt.

What Retail Feels About Applied Digital Stock

On Stocktwits, retail remained ‘bullish’ on Applied Digital stock as of early Friday, and the message volume on the stream was at ‘high’ levels.

A bullish user reaffirmed their commitment to hold the stock despite the week’s declines. “I messed up by being irrational when QBTS and RGTI had their corrections under $10 and I sold. They both shot up a month later. Won't do that with APLD, just stop looking and keep loading,” they said.

Another user said he would take a position if the stock drops to $17. While stating that they had previously bought at $10 and sold at $17 — a move they regretted — they said, “Looks like another opportunity is about to unfold.”

Applied Digital stock has moved in a 52-week range of $3.31 to $40.20, and has gained over 200% this year.

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