Applied Digital Corporation (NASDAQ: APLD) has experienced fluctuations in its stock price recently, highlighting the vulnerability of the stock to trading decisions by large stakeholders.
Despite this short-term setback, the company has provided impressive long-term returns, with a 221% increase over the past year.
This analysis will delve into the ownership structure of Applied Digital, examining the implications for the company’s stock price and future performance.
Institutional Ownership
Institutional investors are significant players in Applied Digital, owning 47% of the company’s stock.
This high level of institutional ownership suggests that these investors have confidence in the company’s prospects. Typically, institutions like mutual funds, pension funds, and insurance companies have rigorous due diligence processes, which implies that their analysts see potential in Applied Digital.
However, heavy institutional ownership also comes with risks. When multiple institutions hold large positions in a stock, there is a risk of a “crowded trade.” If the stock starts to perform poorly, these institutions might rush to sell their shares, leading to a rapid decline in the stock price.
This phenomenon can exacerbate losses, particularly for companies without a long history of growth or stability.
Institutional Influence
Institutional investors often measure their performance against benchmarks and may become more enthusiastic about a stock once it is included in a major index. This can lead to increased buying and higher stock prices.
Conversely, if institutional investors lose confidence or need to reallocate their portfolios, they might sell large quantities of stock, leading to significant price drops.
The fact that Applied Digital has institutional investors indicates that these analysts have assessed the company positively. However, it’s crucial to acknowledge that institutions can make mistakes just like any other investor. The stock’s recent 18% decline shows how quickly market sentiment can change.
Historic Earnings and Revenue Growth
Examining Applied Digital’s historical earnings and revenue growth provides further insight into the company’s performance and prospects. Although past performance does not guarantee future results, a consistent track record of growth can instill confidence in investors.
Applied Digital’s substantial one-year return of 221% suggests strong performance, but investors should remain cautious and monitor the company’s ongoing financial health.
Major Shareholders
The largest shareholder of Applied Digital is Cummins Family Ltd, which owns 17% of the company. Xu Xin and Chen Guo are the second and third largest shareholders, each holding 7% of the stock.
Wesley Cummins, the CEO, also holds 3.5% of the shares. These significant holdings by major shareholders indicate a high level of confidence in the company’s future.
Concentration of Ownership
The concentration of ownership among the top shareholders means that a small number of investors have considerable influence over the company.
The top nine shareholders account for roughly 53% of the total shares, which can lead to stability in decision-making but also raises the risk of coordinated actions affecting the stock price.
While the presence of substantial institutional and insider ownership can be seen as a vote of confidence, it also means that these shareholders’ trading decisions can significantly impact the stock price.
Investors should be aware of this dynamic and consider how the actions of these major shareholders might influence the company’s future.
Insider Ownership
Insider ownership refers to shares held by individuals within the company, such as executives and board members. In the case of Applied Digital, insiders own a significant proportion of the company, with their holdings valued at approximately $124 million in a $553 million business.
This level of insider ownership can be a positive indicator, suggesting that those running the company are personally invested in its success.
Recent Insider Activity
However, recent insider selling can be a red flag. Insiders selling shares might indicate a lack of confidence in the company’s future prospects or simply personal financial planning.
Investors should closely monitor insider trading activity, as it can provide valuable insights into the company’s internal sentiment.
DISCLAIMER
You should read and understand this disclaimer in its entirety before joining or viewing the website or email/blog list of SmallCapStocks.com (the “Publisher”). The information (collectively the “Advertisement”) disseminated by email, text or other method by the Publisher including this publication is a paid commercial advertisement and should not be relied upon for making an investment decision or any other purpose. The Publisher is engaged in the business of marketing and advertising the securities of publicly traded companies in exchange for compensation. The track record, gains, upside, and/or losses mentioned in the Advertisement, if any, should not be considered as true or accurate or be the basis for an investment. The Publisher does not verify the accuracy or completeness of any information included in the Advertisement. While the Publisher does not charge for the SMS service, standard carrier message and data rates may apply. To unsubscribe from receiving promotional text messages to your phone sent via an autodialer, using your phone reply to the sender’s phone number with the word STOP or HELP for help.
The Advertisement is not a solicitation or recommendation to buy securities of the advertised company. An offer to buy or sell securities can be made only by a disclosure document that complies with applicable securities laws and only in the states or other jurisdictions in which the security is eligible for sale. The Advertisement is not a disclosure document. The Advertisement is only a favorable snapshot of unverified information about the advertised company. An investor considering purchasing the securities, should always do so only with the assistance of his legal, tax and investment advisors. Investors should review with his or her investment advisor, tax advisor or attorney, if and to the extent available, any information concerning a potential investment at the web sites of the U.S. Securities and Exchange Commission (the "SEC") at www.sec.gov; the Financial Industry Regulatory Authority (the "FINRA") at www.FINRA.org, and relevant State Securities Administrator website and the OTC Markets website at www.otcmarkets.com. The Publisher cautions investors to read the SEC advisory to investors concerning Internet Stock Fraud at www.sec.gov/consumer/cyberfr.htm, as well as related information published by the FINRA on how to invest carefully. Investors are responsible for verifying all information in the Advertisement. As an advertiser, we do not verify any information we publish. The Advertisement should not be considered true or complete.
The Publisher does not offer investment advice or analysis, and the Publisher further urges you to consult your own independent tax, business, financial and investment advisors concerning any investment you make in securities particularly those quoted on the OTC Markets. Investing in securities is highly speculative and carries an extremely high degree of risk. You could lose your entire investment if you invest in any company mentioned in the Advertisement. You acknowledge that we are not an investment advisory service, a broker-dealer or an investment adviser and we are not qualified to act as such. You acknowledge that you will consult with your own independent, tax, financial and/or legal advisers regarding any decisions as to any company mentioned here. We have not determined if the Advertisement is accurate, correct or truthful. The Advertisement is compiled from publicly available information, which include, but are not limited to, no cost online research, magazines, newspapers, reports filed with the SEC or information furnished by way of press releases. Because all information relied upon by us in preparing an advertisement about an issuer comes from a public source, it is not reliable, and you should not assume it is accurate or complete.
By your subscription to our profiles, the viewing of this profile and/or use of our website, you have agreed and acknowledged the terms of our full disclaimer and privacy policy which can be viewed at the following link: www.SmallCapStocks.com/Disclaimer and www.SmallCapStocks.com/Privacy-Policy
By accepting the Advertisement, you agree and acknowledge that any hyperlinks to the website of (1) a client company, (2) the party issuing or preparing the information for the company, or (3) other information contained in the Advertisement is provided only for your reference and convenience. The advertiser is not responsible for the accuracy or reliability of these external sites, nor is it responsible for the content, opinions, products or other materials on external sites or information sources. If you use, act upon or make decisions in reliance on information contained in any disseminated report/release or any hyperlink, you do so at your own risk and agree to hold us, our officers, directors, shareholders, affiliates and agents harmless. You acknowledge that you are not relying on the Publisher, and we are not liable for, any actions taken by you based on any information contained in any disseminated email or hyperlink.
Dean is a freelance content writer who contributes to various Digital Media Companies and independent websites all over the world. He has over 20 years of financial industry experience, so it’s safe to say he’s well informed.
