Shares of Applied Digital Corporation (NASDAQ: APLD) plummeted 13.78% in pre-market trading on Tuesday following the release of the company's fiscal third quarter 2025 results that fell short of analyst expectations. The digital infrastructure provider reported revenue of $52.9 million, 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. The company's net loss widened to $36.1 million from $25.2 million in the prior year period. Additionally, revenue from the 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 also saw revenues decrease 7% year-over-year to $35.2 million.

Despite management highlighting ongoing negotiations with hyperscalers for future capacity and recent financing arrangements, investors seem concerned about the company's near-term growth trajectory and rising debt load. Applied Digital's debt levels increased substantially to $689.1 million, up from $79.5 million at the end of May 2024. The pre-market sell-off extends Applied Digital's year-to-date stock price decline, which stood at approximately 28% prior to this latest drop.