Market Sentiment Around Loss-Making Applied Digital Corporation (NASDAQ:APLD)
We feel now is a pretty good time to analyse Applied Digital Corporation's (NASDAQ:APLD) business as it appears the company may be on the cusp of a considerable accomplishment. Applied Digital Corporation designs, develops, and operates datacenters in North America. The company’s loss has recently broadened since it announced a US$22m loss in the full financial year, compared to the latest trailing-twelve-month loss of US$43m, moving it further away from breakeven. As path to profitability is the topic on Applied Digital's investors mind, we've decided to gauge market sentiment. In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.
View our latest analysis for Applied Digital
According to the 5 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$21m in 2024. The company is therefore projected to breakeven just over a year from now. In order to meet this breakeven date, we calculated the rate at which the company must grow year-on-year. It turns out an average annual growth rate of 126% is expected, which signals high confidence from analysts. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.
We're not going to go through company-specific developments for Applied Digital given that this is a high-level summary, however, keep in mind that by and large a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.
Before we wrap up, there’s one aspect worth mentioning. The company has managed its capital prudently, with debt making up 33% 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:
This article is not intended to be a comprehensive analysis on Applied Digital, so if you are interested in understanding the company at a deeper level, take a look at Applied Digital's company page on Simply Wall St. We've also compiled a list of relevant 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.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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.
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