Applied Digital (APLD) Sees Surge in Option Trading Activity Ahead of Earnings Report

Applied Digital (APLD) sees intense option activity with 79,581 call options exchanged, pushing implied volatility up 5 percentage points to 105.91%. The July 25 call options at strike prices of $10 and $11 are particularly active, with a put/call ratio at 0.16 indicating a bullish sentiment among traders. Based on analyst forecasts, the average target price for APLD is $14.61, implying an upside of 33.13% from the current price. The average brokerage recommendation is 2.1, indicating an "Outperform" status.

Applied Digital Corporation (APLD) has seen a significant surge in options activity, with 79,581 call options exchanged, pushing implied volatility up to 105.91%. This increase, which is 5 percentage points higher than the typical range, indicates heightened investor interest and uncertainty. The July 25 call options at strike prices of $10 and $11 are particularly active, with a put/call ratio of 0.16, suggesting a bullish sentiment among traders.

Analysts remain optimistic about APLD's prospects. Based on the one-year price targets offered by 25 analysts, the average target price for APLD is $14.61, implying an upside of 33.13% from the current price of $10.99. The consensus recommendation from 28 brokerage firms is currently 2.1, indicating an "Outperform" status.

APLD's recent earnings report for Q1 2025 showed mixed results. The company reported total revenue of $52.92 million, a decrease of 12.4% compared to Q1 2024. Adjusted operating margin was 14.5%, and revenue from high-performance computing services decreased by 10% year over year. Despite these challenges, APLD generated $17.7 million in cash flow from operations and $10.4 million in free cash flow, while repurchasing approximately $20 million of its common stock [2].

The company expects to return at least $100 million of cash to shareholders through buybacks and dividends in 2025, demonstrating a commitment to shareholder returns [2]. Additionally, APLD has secured significant contracts, including work with Microsoft in North America and exploration projects in Europe, showcasing its strong value proposition and service quality [2].

However, there are several challenges on the horizon. Revenue from high-performance computing services decreased due to lower activity in Europe, and the company recognized a pretax charge of $15 million due to severance costs, asset impairments, and other items, impacting financial results [2]. Increased uncertainty in the market due to recent economic concerns and the faster-than-expected return of OPEC production could also affect future performance [2].

In conclusion, APLD's recent surge in options activity and positive analyst forecasts suggest a bullish outlook. However, the company faces challenges in certain regions and markets, which could impact future performance. Investors should closely monitor the company's earnings reports and market conditions.

References:
[1] https://www.gurufocus.com/news/2972881/halliburton-hal-sees-surge-in-options-activity-amid-rising-implied-volatility-hal-stock-news
[2] https://www.marketbeat.com/instant-alerts/stock-traders-purchase-high-volume-of-applied-digital-call-options-nasdaqapld-2025-07-17/