Earnings Preview: Short Sellers Target Applied Digital Stock

Applied Digital Corporation (NASDAQ:APLD) is scheduled to report fiscal first-quarter earnings after the close tomorrow, Oct. 7. Zacks Consensus Estimates call for a loss of 26 cents per share.

APLD has a mixed post-earnings history, though recent reactions have skewed positive, with the stock finishing the session higher after five of its last six quarterly reports. Over the last 12 reports, the shares averaged a 13.9% earnings-day move, regardless of direction.

Despite heavy call volume, options traders are striking a bearish tone today. So far, roughly 64,000 calls and 20,000 puts have crossed the tape, though order-flow data shows net option delta volume of negative 19,095 shares, indicating bearish pressure is outweighing bullish bets on balance.

Longer-term options activity also shows some caution. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), APLD's 50-day put/call volume ratio of 0.35 ranks in the 95th percentile of its annual range. This indicates puts have been picked up at a faster-than-usual pace relative to calls during the past 10 weeks, despite calls still outnumbering puts on an absolute basis.

Short sellers are firmly in the picture as well, as short interest accounts for 21.4% of APLD's available float. At the stock's average pace of trading, it would take over three days for shorts to buy back their bearish bets.

Wall Street, meanwhile, is firmly bullish. Of the 16 analysts in coverage, 12 rate APLD a "strong buy," one says "buy," two recommend a "hold," and just one carries a "strong sell" rating.

On the charts, APLD has found strong support at the $24 level, though overhead pressure remains at the $32 level, which is also home to the 200-day moving average. Year to date, the equity is up 3.4%.