Applied Digital Corporation witnessed a dramatic selloff on Thursday, with its stock price collapsing by more than 20%. The sharp decline was triggered by the company’s announcement of two major financing initiatives totaling over $3 billion, aimed at funding an ambitious expansion into artificial intelligence data centers.
Investor Anxiety Sparks Selloff
The market’s reaction to the capital-raising plans was swift and severe. Trading activity surged significantly, with shares changing hands between $22.33 and $26.15 throughout the session before settling with losses of up to 24%. The intense selling pressure reflected deep investor concerns about the company’s rising debt burden and the potential for shareholder value dilution.
Details of the Financing Package
The infrastructure-focused company finalized terms for a $2.35 billion senior secured notes offering on Thursday evening. These notes, which mature in 2030, carry an interest rate of 9.25% and were priced at 97% of their face value. The debt issuance is expected to be finalized around November 20.
In a complementary move, Applied Digital plans to draw an additional $787.5 million from its existing preferred equity facility with Macquarie Asset Management. Combined, these substantial financial resources are earmarked for constructing two AI data center facilities in North Dakota and repaying current credit lines.
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Strategic Pivot Carries Significant Costs
This comprehensive financing arrangement signals a fundamental strategic shift for Applied Digital, moving its focus away from blockchain infrastructure toward the competitive AI data center market. However, this ambitious transformation comes with considerable financial obligations.
The new bond issue alone will create annual interest expenses exceeding $217 million. Meanwhile, the preferred stock arrangement carries an even heavier burden with a dividend yield of 12.75%, creating substantial ongoing payment commitments.
Whether Applied Digital can successfully manage this debt load depends entirely on the timely completion of its data center expansion and securing sufficient demand from AI clients. The company’s upcoming financial report scheduled for January 13, 2026, will provide crucial evidence indicating whether this high-stakes strategic gamble will yield returns or if the crushing debt burden will overwhelm the company’s finances.
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