Applied Digital Corp. (NASDAQ:APLD) has entered into a Dealer Manager Agreement with Preferred Capital Securities, LLC to manage the offering of up to 2,500,000 shares of its Series E-1 Redeemable Preferred Stock, with the public offering price set at $25.00 per share. This agreement, dated September 23, 2024, follows a similar structure to previous offerings of Series E Redeemable Preferred Stock.
The Series E-1 Preferred Stock terms will be substantially the same as those of the prior Series E Offering, as detailed in the prospectus supplement dated May 16, 2024. Applied Digital has filed a registration statement, which is not yet effective, with the SEC to register the offer and sale of these shares. The Dealer Manager will endeavor to sell the shares per the terms outlined in the prospectus, once the registration statement becomes effective.
Applied Digital will compensate the Dealer Manager with a fee of 2% of the Stated Value per Share sold and a selling commission of up to 6% of the Stated Value per Share sold in the offering. The final prospectus will detail any potential reductions or eliminations of selling commissions for certain sales.
Additionally, on the same date, Applied Digital amended and restated a Services Agreement with Preferred Shareholder Services, LLC, an affiliate of the Dealer Manager, to provide non-distribution related support services for the Series E-1 Preferred Stock and Series E Preferred Stock.
Forward-looking statements in this report, including expectations of future events, performance, and the closing of the transaction, are subject to risks, uncertainties, and other factors that could cause actual results to differ materially from those anticipated by the company.
In other recent news, Applied Blockchain Inc's earnings outperformed expectations, reporting $43.3 million for the quarter, as noted by H.C. Wainwright, which maintained a Buy rating and a price target of $5.00. B.Riley also raised the stock price target for Applied Blockchain to $9.00, following a detailed evaluation of the company's financials and recent financing. However, Roth/MKM adjusted the price target to $10 due to increased costs in the company's fourth-quarter earnings report.
Simultaneously, Applied Digital Corporation secured $160 million in private placement financing, emphasizing its role in the accelerated compute space. The company is constructing one of the world's largest data centers and developing an additional 300MW of data center capacity.
Also, Applied Digital raised $50 million through a private financing deal to support the company's expansion and the construction of its Ellendale High-Performance Computing data center.
Despite a significant increase in Q4 revenues to $43.7 million from $22 million year-over-year, Applied Digital's net loss widened to $64.8 million from $6.5 million in the same quarter last year. These recent developments highlight the companies' strategic progress, with growth dependent on finalizing lease agreements and securing potential project financing. Both companies are nearing the completion of lease agreements and expect sequential revenue improvements in the coming quarter.
InvestingPro Insights
Applied Digital Corp.'s recent move to offer Series E-1 Redeemable Preferred Stock aligns with its aggressive growth strategy, as evidenced by InvestingPro data. The company's revenue growth is impressive, with a 198.92% increase over the last twelve months as of Q4 2024. This substantial growth may explain the need for additional capital through the new stock offering.
However, investors should note that Applied Digital is currently operating at a loss, with an operating income of -$81.23 million in the same period. This is reflected in an InvestingPro Tip that analysts do not anticipate the company will be profitable this year. Despite this, the stock has shown strong performance, with a 74.42% price return over the last month and trading near its 52-week high.
Another InvestingPro Tip indicates that the stock generally trades with high price volatility, which potential investors in the new preferred stock offering should keep in mind. For those considering this investment, it's worth noting that InvestingPro offers 17 additional tips for Applied Digital, providing a more comprehensive analysis of the company's financial health and market position.
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