Shares of Applied Digital Corporation (NASDAQ: APLD) plummeted 12.85% in after-hours trading on Monday following the release of the company's fiscal third quarter 2025 results that fell short of analyst expectations.

The digital infrastructure company reported revenue of $52.9 million for the quarter ended February 28, 2025, up 22% year-over-year but significantly below the consensus estimate of $63.42 million. While Applied Digital's adjusted loss per share of $0.08 beat expectations of a $0.11 loss, investors appeared more focused on the top-line miss and other concerning metrics.

Key factors contributing to the stock's sharp decline include:

• Revenue from the company's Cloud Services segment declined sequentially from $27.7 million in Q2 to $17.8 million in Q3 due to technical issues in transitioning to a new business model.
• The Data Center Hosting segment saw revenues decrease 7% year-over-year to $35.2 million.
• Applied Digital's net loss widened to $36.1 million from $25.2 million in the prior year period.
• The company's debt levels increased substantially to $689.1 million, up from $79.5 million at the end of May 2024.

While management highlighted ongoing negotiations with hyperscalers for future capacity and recent financing arrangements, investors appear concerned about the company's near-term growth trajectory and rising debt load. The after-hours sell-off extends Applied Digital's year-to-date stock price decline, which stood at approximately 28% prior to this latest drop.