Applied Digital: Building A Starter Position On This High Growth Play (Archive)

This 5-Minute Pitch was originally published on Seeking Alpha before the launch of the Hunting Alphas website. It is shared here to showcase my previous work and track record. New 5-Minute Pitches published on this site will not be disseminated anywhere else.

Elevator Pitch

• Applied Digital is transitioning from operating data centers for crypto mining customers to building and operating data centers for larger hyperscaler companies.
• There is significant growth potential ahead as they are close to signing a 100MW lease deal with a hyperscaler and seeing high interest for an additional 300MW of capacity.
• The ~$880 million annual revenue potential if the 400MW of capacity gets leased out is far from being priced in by consensus revenue estimates.
• Revenue and EBIT delivery is starting to beat consensus expectations. Recent fund raises have bolstered the balance sheet and indicate positive investor sentiment.
• Premium valuations and delays in lease signings are key risks, which is why despite bullish technicals, I am inclined to start with 20% of my intended position size, with plans of adding 20% for every 100MW of capacity lease finalized.

Read the full article here.