Applied Digital Corporation (NASDAQ: APLD)

This lawsuit is for anyone who acquired securities in Applied Digital Corporation (NASDAQ: APLD) from April 13, 2022 through July 26, 2023.

The lawsuit alleges that the Company and certain of its executives violated federal law. Specifically, the lawsuit alleges that, throughout the time period mentioned above, the Company misled investors regarding its financial condition. More specifically, the lawsuit alleges that the Company misled investors by stating that the Company’s Board was independent, when in fact members of the Company’s Board were using undisclosed related party transactions to enrich themselves at the expense of minority shareholders. The Company also overstated the profitability of the Company’s data center hosting business and the Company’s ability to successfully transition into a low-cost AI Cloud services provider in order to cover up that members of the Board were enriching themselves through undisclosed related party transactions.

On July 6, 2023, The Bear Cave and Wolfpack Research published reports alleging, among other things, that Applied Digital “relies on puffery over substance,” and “pumped up its stock . . . by claiming to pivot from a floundering business hosting bitcoin miners, to becoming a low-cost AI cloud service provider.” The reports further highlighted concerns regarding related party transactions, governance, and potential conflicts of interest. On this news, the price of the Company’s stock dropped precipitously on unusually heavy trading volume. Then, on July 26, 2023, The Friendly Bear published a short report on Applied Digital.  The Friendly Bear report expressed the view that B. Riley “is controlling managerial decisions at Applied Digital to the detriment of Applied Digital shareholders”; that Applied Digital’s board does not “meet[] the independence requirements under Nasdaq rules and . . . is essentially controlled by B. Riley.” The Friendly Bear report also alleged that clear conflicts of interest undermined the Company’s purported investigation into sexual harassment claims made against Defendant Cummins the previous month, noting that the manner in which the claims were summarily dismissed by Applied Digital’s Audit Committee could subject Applied Digital to “significant legal blowback.” On this news, the price of the Company’s stock dropped precipitously on unusually heavy trading volume.

The Law Offices of Howard G. Smith seeks to recover damages on behalf of class members. If you acquired securities in Applied Digital Corporation (NASDAQ: APLD) from April 13, 2022 through July 26, 2023 you may join the lawsuit by submitting your information online, or you may call the Law Offices of Howard G. Smith and speak to Mr. Smith directly to learn how he can protect your rights.