Bitcoin, the world’s largest digital asset, has hit a three-month low, falling below $90,000 for the first time since November, impacting companies like Riot Platforms (RIOT). This decrease in value follows suit with other cryptocurrencies, such as XRP and Ether, which also experienced significant drops in value. Contributing factors include the recent decline of U.S. tech stocks and a high-profile hack resulting in the loss of $1.5 billion in digital assets from Dubai-based platform Bybit. Despite the volatility in the crypto market, Riot’s Bitcoin mining revenue saw a considerable increase in 2024, contributing to a total revenue of $376.7 million for the year. Yet, Riot’s share price has mirrored the recent cryptocurrency’s decline, dropping over 21% in the past five days.
Bitcoin Mining Down While Revenue Is Up
Riot Platforms is a Bitcoin mining company with three key operations: Bitcoin Mining, Data Center Hosting, and Engineering. It offers institutional-scale Bitcoin mining firms co-location services and the necessary infrastructure and workforce. Moreover, it operates data centers and manages computing capacity. The company also specializes in designing and producing power distribution equipment and electrical products, with services spanning markets like power generation, utility, water, industry, and more.
For the fiscal year of 2024, total revenue increased to $376.7 million, primarily due to a $132 million boost in Bitcoin mining revenue. Despite producing fewer Bitcoins (4,828) compared to 2023 (6,626) and increased mining costs, the company generated $33.7 million in power credits. There was a decrease in engineering revenue to $38.5 million, mainly due to supply chain issues impacting a key governmental contract. The company retained a solid financial position with $439.1 million in working capital, $277.9 million in cash, and 17,722 unencumbered Bitcoins valued at around $1.65 billion.
Bullish Outlook with Tempered Price Targets
Analysts following the company have been bullish on the stock. For example, Needham analyst John Todaro reiterated a Buy rating yet lowered the price target to $13.50 (from $16), noting the company’s strategic initiatives, satisfactory operational performance, and potential growth in AI and HPC suitability. However, the price target has been reduced due to challenges, including weak Bitcoin prices and a high global hash rate.
Riot Platforms is rated a Strong Buy overall, based on the recent recommendations of nine analysts. The average price target for RIOT stock is $18.36, which represents a potential upside of 97.00% from current levels.
