Feb. 6 at 7:40 PM
$APLD $APLZ Red Flag 3: Applied Digital's lease revenue is far from guaranteed
The whole narrative driving Applied Digital's stock higher rests on the
$16 billion in revenue its leases will collectively generate over 15 years --
$11 billion of which comes from CoreWeave. Investors love the security of lease revenue as it is nearly guaranteed. But that's the key -- nearly.
To win CoreWeave's business, Applied Digital had to agree to lease terms that many companies would not, including the fact that CoreWeave has the right to walk away from the lease completely -- penalty-free -- if Applied Digital fails to complete construction in time.