Applied Digital Corp (NASDAQ: APLD) saw its stock plummet 5.13% in pre-market trading on Tuesday, as investors reacted to the company's recent financial maneuvers. The sharp decline comes despite positive analyst sentiment, highlighting the market's concerns over potential dilution.

The data center solutions provider filed for a mixed shelf offering with the SEC, although the size was not disclosed. Additionally, the company filed for the resale of up to 39.7 million shares of common stock by selling stockholders. These actions typically signal a potential increase in the number of outstanding shares, which can lead to dilution of existing shareholders' stakes.

Interestingly, the stock's decline occurred in the face of bullish analyst ratings. Needham raised its target price for Applied Digital from $10 to $12, while maintaining a Buy rating. Similarly, Craig-Hallum and HC Wainwright & Co. also reiterated their Buy ratings on the stock. However, the positive outlook from analysts was not enough to offset investor concerns about the potential dilution from the shelf offering and share resale.