Is Applied Digital Corp. overvalued or undervalued?

As of 24 January 2022, the valuation grade for Applied Digital Corp. has moved from does not qualify to risky, indicating a heightened level of concern regarding its financial health. The company appears to be overvalued given its high valuation ratios, including a Price to Book Value of 6.41, an EV to EBITDA of 149.25, and a negative ROE of -20.77%.
In comparison to its peers, Applied Digital Corp. shows significantly poorer performance, with its EV to EBITDA ratio being substantially higher than that of PC Connection, Inc. at 12.87 and A10 Networks, Inc. at 20.28. The company's recent stock performance has been impressive, with a YTD return of 160.60% compared to the S&P 500's 12.22%, suggesting that while the stock has performed well in the short term, its valuation metrics indicate it may not be sustainable in the long run.