Applied Digital Plunges 11.73% on Revenue Miss, Cloud Unit Sale

On April 15, 2025, Applied Digital's stock experienced a significant drop of 11.73% in pre-market trading, reflecting investor concerns over the company's recent financial performance.

Applied Digital reported third-quarter revenue of $52.9 million, falling short of analysts' estimates of $63.4 million. This revenue miss was attributed to a 7% decline in its data center operations, which are crucial for cryptocurrency mining. The company also reported a net loss of $36.1 million, or -$0.16 per share, compared to a previous loss of $62.8 million, or -$0.52 per share.

In response to these financial challenges, Applied Digital's board has approved exploring the sale of its cloud services unit. This strategic move aims to shift the company's focus towards real estate, with the goal of becoming a data center real estate investment trust (REIT). This pivot is seen as a way to stabilize the company's financial performance amidst rising operational expenses, including new US tariffs on tech imports and seasonal power cost changes.

Despite these hurdles, Applied Digital posted an adjusted loss of 8 cents per share, slightly beating analysts' forecasts. The company's shift towards real estate could attract investors interested in the stable returns from REITs, potentially changing its market dynamics. However, the tech sector continues to face cost pressures from tariffs, impacting profitability. Investors are advised to monitor these market changes as tech companies adapt to new challenges and opportunities.