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Founded in spiritual texts and later adopted by investors, entrepreneurs and common folks, the aphorism that there’s nothing new under the sun has been a surprisingly accurate barometer. From social movements to global exploration to eventual conflict, the dictum is another way of saying that history repeats itself.
Some might say blockchain and the underlying cryptocurrency revolution are humankind’s first truly unprecedented fiscal and economic innovation. That, however, is not entirely the case.
To be sure, ancient civilizations could only dream about the computing technology modern societies freely access without a second thought. Not only that, the movement to digitalize common functionalities — the burgeoning industry called the Internet of Things (IoT) — promises exponential breakthroughs in productivity and efficiency. Further, the rising role of artificial intelligence stacks innovation upon innovation, accelerating progress to previously unfathomable zeniths.
Yet decentralization integrated within an economic ecosystem has a rich and storied history across the world. Back home, private currencies — which could be issued by state-chartered banks or established entities like businesses — spread widely to varying degrees of success before the implementation of a national currency.
Therefore, investors will want to perform careful due diligence before considering the upcoming public offering of Applied Blockchain Inc. (PINK: APLD) before making a final decision.
When Is the Applied Blockchain IPO Date?
When it comes to public market debuts, Applied Blockchain occupies a distinct subsegment. Technically speaking, what the company hopes to accomplish — an uplisting from the over-the-counter market to the Nasdaq exchange — is not a true initial public offering (IPO). Instead, it’s akin to a promotion from a low-visibility arrangement to a high-visibility listing in a proper exchange.
Where the confusion lies for APLD stock is that the underlying firm — which specializes in mining Bitcoin and Ethereum cryptocurrencies — entered similar processes typical for a traditional IPO, such as filing a Form S-1 prospectus with the U.S. Securities and Exchange Commission (SEC) and hiring an underwriter.
But if you consider Applied Blockchain’s public statements, management is careful to use the term “public offering” sans “initial.” And this terminology is 100% kosher as an IPO would represent the first time a private enterprise releases its equity shares for distribution to the public. Since anyone can purchase APLD stock today, the proposed uplisting is essentially a spiritual IPO to a much wider audience.
Though the terms of the deal remain uncrystallized — including a launch date — Applied Blockchain’s prospectus states that it intends to raise up to a maximum of $75 million (subject to change). At time of writing, the number of shares the company plans to issue is unknown. However, B. Riley Securities is on board as the bookrunning manager.
Though anything related to cryptos presents massive volatility risks to prospective buyers, APLD stock is considering entering the public fray at an interesting juncture. As prior Benzinga publications have noted, U.S.-based IPOs totaled more than $301 billion in 2021, shattering records set in the prior year. Broaden the horizon globally, and new listings have raised over $594 billion.
To be fair, the hawkish tone that the Federal Reserve set late last year — publicly disclosing a series of rate hikes in 2022 — imposes an uncertain cloud over investors. The shift in policy will likely raise borrowing costs, thus potentially cooling the fervor in the economy. However, high-risk activity in the market — with evidence coming from stock trading on margin reaching record highs in 2021 — implies a possibly powerful backdrop for APLD stock.
Additionally, many investors that sat regretfully on the sidelines as individual cryptos set blistering records will want to participate in blockchain-related initiatives. Since the broker-dealer networks that undergird trades in the over-the-counter market provide low visibility and a poor reputation, APLD’s uplisting to the Nasdaq (assuming regulatory approval) could represent a significant turning of the tide.
Applied Blockchain Financial History
On the surface, the concept of investing in a crypto-mining firm is incredibly appealing because it helps distribute the underlying asset category’s risk profile. For instance, buying Bitcoin alone exposes you to myriad risk headwinds, including the possibility of the asset going to zero. But the mechanisms that power crypto-mining initiatives — such as high-capacity graphics processing units (GPUs) — can be redirected toward other coins and tokens.
Specific to Applied Blockchain, the company is in the process of building next-generation data centers, per its prospectus. It acquired property in North Dakota for the construction of its first co-hosting facility. The choice of this particular state is intriguing because, with an average electricity cost of 12.07 cents per kilowatt hour (kWh), its utility-related costs are lower than the U.S. average of 12.52 cents per kWh.
Plus, North Dakota can get quite chilly during the winter season. As The Wall Street Journal pointed out, imaginative individuals and enterprises have leveraged their environmental attributes to great effect, namely using the heat generated from crypto-mining equipment to stay warm.
Still, prospective investors of APLD stock should consider the equity unit not as a play on virtual currencies but rather a biotechnology firm. As Applied Blockchain’s Form S-1 document indicates, management discloses that, according to Rule 405 of the Securities Act of 1933, the mining firm is technically a shell company.
Therefore, on its books, Applied Blockchain shows no revenue. Instead, management has been accumulating selling, general and administrative (SGA) costs, with a net loss of $263,000 in the fiscal year ending May 31, 2020, expanding to a loss of $568,000 in the following fiscal year.
Just like a speculative biotech outfit, buying APLD stock is akin to subsidizing someone else’s dream. While society is rife with stories about underdogs like Tom Brady — drafted 199 overall in the 2000 NFL Draft — making it to the top echelon of their discipline and proving the doubters wrong, the harsh reality is that the doubters are only wrong on the statistical anomalies.
By and large, the doubters are correct.
By logical deduction, investors should not consider putting any money they can’t afford to lose on APLD stock. Risky biotech firms market an advanced therapy that may not make it through rigorous clinical trials. In the same vein, while Applied Blockchain may sell a narrative about future crypto-mining revenues, the probability that such endeavors will succeed is low primarily because of sector volatility.
Applied Blockchain Potential
Despite serious financial reservations about Applied Blockchain, APLD stock has performed extraordinarily well. Previously (and literally) a penny stock, APLD at time of writing is up 10,375% on a trailing-year basis. Over the trailing month, shares are up over 39%, reflecting incredible demand despite the red ink that crypto assets posted since approximately mid-November 2021.
Thus, you cannot deny the upside potential of APLD. Yes, a huge wall of risks await anyone who puts their money to work here. Yet the community of crypto supporters have so far egg-faced the naysayers.
But beyond the market and administrative risks (such as cyberattacks and identity theft) associated with cryptocurrencies, a possibility exists of government intervention. As the website for the U.S. Senate notes, “Designed to replace the corrupt, decentralized and inefficient system of state banks and bank notes, the National Bank Act of 1863 was largely the work of Secretary of the Treasury Salmon P. Chase and Senate Finance Committee member John Sherman of Ohio.”
Interestingly, the act in part focused on reestablishing the central bank that President Andrew Jackson’s populist administration destroyed. Populist-driven currencies have sprouted before, but they have thus far lacked the staying power of stable, nationalized currencies.
How to Buy Applied Blockchain IPO (APLD) Stock
Interested investors should prepare to acquire APLD at the open, which entails knowing how to buy stocks. Below is a quick refresher.
Step 1: Pick a brokerage.
Because the best brokers compete on similar terms, take the time to consider which platform is ideal for you.
Step 2: Decide how many shares you want.
Since crypto-related ventures are highly speculative, choose a balanced share count.
Step 3: Choose your order type.
Before trading, learn these market concepts.
- Bid: The buyer’s best offer for a stock.
- Ask: The seller’s lowest acceptable price.
- Spread: The difference between the bid-ask price, the spread indicates market risk as this is also the profit margin for market makers.
- Limit order: Buy or sell requests at a predetermined price, limit orders provide transparency but no execution guarantees.
- Market order: Market orders guarantee fulfillment but only at the current rate.
- Stop-loss order: Stop-loss orders automatically exit your position at either a predetermined price or anything lower.
- Stop-limit order: Stop-limit orders only leave positions at a specified price, but they also carry non-fulfillment risks.
Step 4: Execute your trade.
Follow these steps to execute a market order:
- Select your action type (buy or sell).
- Enter the shares you want to acquire (or sell).
- Hit the Buy (or Sell) button.
Follow the same sequence for limit orders (but include your execution price).
APLD Restrictions for Retail Investors
Review the Financial Industry Regulatory Authority (FINRA) rules on restricted persons before participating in an IPO. Don’t engage if you have privileged information.
APLD Pre-IPO
At this time, no pre-IPO information is available.
Speculation of the Highest Order
On balance, APLD stock offers the ability for everyday investors to participate in the crypto narrative without exposing themselves to pure decentralization. Simultaneously, however, virtual currencies have proven wildly volatile, and downwind investments may not fare so well if circumstances go awry.
The author holds a long position in Bitcoin and Ethereum.
