Applied Digital Q2 FY25 Review: Continuous Delays In Signing Customer Is Disappointing (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 reported Q2 FY25 earnings after market hours yesterday. Going into this, I had a bullish view. But the lack of developments in signing a customer activates a key risk.
• APLD has been unable to close a customer for its 100MW data center in Ellendale for more than a year now. This reduces my confidence in management's execution ability.
• I note that Q2 FY25 EBIT profitability is skewed upward due to changes in D&A useful life assumptions.
• APLD's data center capacity expansions have the confidence of funders such as Macquarie Asset Management, which has extended it $900 million in funding, with up to $4.1 billion in the pipeline.
• Valuations continue to be elevated vs peers, but given execution delays, it may not be as justified to support buys. On APLD vs SPX 500, the buyers are struggling to break the key resistance level.

Read the full article here.