Applied Digital Corporation (NASDAQ:APLD) Could Be Less Than A Year Away From Profitability
Applied Digital Corporation (NASDAQ:APLD) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Applied Digital Corporation designs, develops, and operates datacenters in North America. The company’s loss has recently broadened since it announced a US$45m loss in the full financial year, compared to the latest trailing-twelve-month loss of US$52m, moving it further away from breakeven. The most pressing concern for investors is Applied Digital's path to profitability – when will it breakeven? Below we will provide a high-level summary of the industry analysts’ expectations for the company.
Check out our latest analysis for Applied Digital
According to the 7 industry analysts covering Applied Digital, the consensus is that breakeven is near. They anticipate the company to incur a final loss in 2023, before generating positive profits of US$32m in 2024. So, the company is predicted to breakeven approximately 12 months from now or less. How fast will the company have to grow to reach the consensus forecasts that anticipate breakeven by 2024? Working backwards from analyst estimates, it turns out that they expect the company to grow 101% year-on-year, on average, which is rather optimistic! Should the business grow at a slower rate, it will become profitable at a later date than expected.
We're not going to go through company-specific developments for Applied Digital given that this is a high-level summary, however, bear in mind that by and large a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.
Before we wrap up, there’s one aspect worth mentioning. The company has managed its capital judiciously, with debt making up 34% of equity. This means that it has predominantly funded its operations from equity capital, and its low debt obligation reduces the risk around investing in the loss-making company.
Next Steps:
There are key fundamentals of Applied Digital which are not covered in this article, but we must stress again that this is merely a basic overview. For a more comprehensive look at Applied Digital, take a look at Applied Digital's company page on Simply Wall St. We've also compiled a list of important factors you should look at:
Valuation: What is Applied Digital worth today? Has the future growth potential already been factored into the price? The intrinsic value infographic in our free research report helps visualize whether Applied Digital is currently mispriced by the market.
Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Applied Digital’s board and the CEO’s background.
Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
