SAN DIEGO–(BUSINESS WIRE)–$APLD #APLD—Robbins LLP informs investors that a shareholder filed a class action on behalf of persons and entities that purchased or otherwise acquired Applied Digital Corporation (NASDAQ: APLD) securities between April 13, 2022 and July 26, 2023. Applied Digital, originally known as Applied Blockchain, designs, develops, and operates datacenters in North America, and provides artificial intelligence (“AI”) cloud services, computing datacenter hosting, and crypto datacenter hosting services.
What is this Case About: Applied Digital Corporation (APLD) Misled Investors Regarding the Efficacy of its Business Model
According to the complaint, during the class period, defendants failed to disclose that: (i) Applied Digital had overstated the profitability of its datacenter hosting business and its ability to successfully transition into a low-cost AI Cloud services provider; (ii) Applied Digital’s Board of Directors was not independent within the meaning of NASDAQ listing rules; and (iii) accordingly, Applied Digital had overstated the efficacy of its business model and failed to maintain proper corporate governance standards.
On July 6, 2023, market analysts Wolfpack Research and The Bear Cave published short reports on Applied Digital. The Wolfpack report raised questions about the viability of the Company’s business model, stating, for example, that the Company “pumped up its stock in May by claiming to pivot from a floundering business hosting bitcoin miners, to becoming a low-cost AI Cloud service provider,” and “[t]he explosion of interest in AI after the emergence of Chat GPT has predictably attracted the worst promoters to peddle fake AI wares to credulous investors, and our analysis indicates that APLD is one of these grifters because it is not an AI company[.]” The Bear Cave report detailed Applied Digital’s problematic corporate history, alleging that “Applied Digital relies on puffery over substance and is a perfect case study on our market’s bizarre underbelly of reverse mergers, microcaps, and shell companies.” On this news, Applied Digital’s stock price fell $1.27 per share, or 14.16%, to close at $7.70 per share on July 6, 2023.
Then, on July 26, 2023, The Friendly Bear published a short report on Applied Digital, stating that Applied Digital’s board does not “meet the independence requirements under Nasdaq rules and . . . is essentially controlled by B. Riley,” among other things. On this news, Applied Digital’s stock price fell 6%, over the following two trading sessions, to close at $9.40 per share on July 28, 2023.
What Now: Similarly situated shareholders may be eligible to participate in the class action against Applied Digital Corporation. Shareholders who want to act as lead plaintiff for the class must file their motion for lead plaintiff by October 11, 2023. A lead plaintiff is a representative party acting on behalf of other class members in directing the litigation. You do not have to participate in the case to be eligible for a recovery. If you choose to take no action, you can remain an absent class member. For more information, click here.
All representation is on a contingency fee basis. Shareholders pay no fees or expenses.
About Robbins LLP: Some law firms issuing releases about this matter do not actually litigate securities class actions; Robbins LLP does. A recognized leader in shareholder rights litigation, the attorneys and staff of Robbins LLP have been dedicated to helping shareholders recover losses, improve corporate governance structures, and hold company executives accountable for their wrongdoing since 2002. Since our inception, we have obtained over $1 billion for shareholders.
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