Why Applied Digital Stock Is Plummeting Today
Key Points
Applied Digital announced plans to raise $787.5 million in equity-backed funding today.
News of the capital raise came on the heels of another big proposed fundraising move at the beginning of the week.
- 10 stocks we like better than Applied Digital ›
Applied Digital (NASDAQ: APLD) stock is seeing another round of sell-offs Wednesday. The company's share price has declined 10% as of 3:10 p.m. ET amid the backdrop of a 0.1% decline for the S&P 500 and a 0.5% decline for the Nasdaq Composite.
The stock began falling after the company announced that it is pursuing another new round of fundraising. The announcement came on the heels of a press release detailing a proposal for raising $2.35 billion through new secured senior notes.
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Applied Digital stock sinks on new fundraising move
Applied Digital announced today that it will receive $787.5 million in funding from Macquarie Asset Management. In exchange for the new cash infusion, Applied Digital will issue new stock for Macquerie.
Applied Digital plans to use the new funds to help with construction and associated expenses at the company's Polaris Forge 1 and Polaris Forge 2 data center campuses in North Dakota. The news comes on the heels of an announcement at the beginning of the week that the company had proposed issuing $2.35 billion in convertible senior notes that would be set to come due in 2030.
What's next for Applied Digital?
In addition to recent pullbacks connected to fundraising moves, Applied Digital has also seen its valuation pressured by a broader trend among investors to assign lower multiples to artificial intelligence (AI) stocks. Fears that valuations for AI stocks could be in a bubble could continue to cause market volatility in the near term, and Nvidia's Nov. 19 third-quarter earnings report looks poised to be a meaningful catalyst for Applied Digital and other companies in the artificial intelligence space.
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Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
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