Beware of APLD, CoreWeave, and SBET
The euphoric stock markets are lifting special scenario stocks in a hurry. Some of the breakouts look too good to be true.
Applied Digital (APLD) traded as low as $3.01 after posting quarterly results in April. But last week, the stock gained 102.93% to close near $14.00. The company said it expected $7 billion in revenue over 15 years in a new lease deal with CoreWeave (CRWV).
Applied would deliver 250 megawatts of IT critical load that hosts CoreWeave’s AI-related computing infrastructure at its data center. CoreWeave has the option to access another 150 MW in critical IT load.
APLD stock had a 36.12% short float. The short squeeze punished the bears. They would need to hang on to their bearish bet while the short squeeze ends.
CoreWeave had a successful share performance after the IPO. However, the company needs to grow free cash flow at current rates. Otherwise, it cannot pay for the deal it has with Applied Digital.
SharpLink Gaming (SBET) is the most dangerous stock today. It traded at $6.72 on May 23. Volume spiked since then, sending SBET stock to a high of $124.12. The company is a sports betting and global iGaming firm. However, it pivoted its business model to fund the holding of Ethereum in a treasury. It sold 69.1 million shares to raise $425 million to fund that purchase.
