On Tuesday, Cantor Fitzgerald initiated coverage on Terawulf Inc. (NASDAQ: NASDAQ:WULF), assigning an Overweight rating to the company's stock with a price target set at $7.00. The firm highlighted Terawulf's competitive power rates and its strategic moves to reduce debt and expand operations.
Terawulf, known for its low gross power rates, only surpassed by CIFR, is currently positioned second-to-last in cost-per-coin analysis among its peers. This is attributed to its significant interest expenses. Nevertheless, Terawulf has been actively improving its financial health by reducing its debt, which stood at approximately $145 million at the beginning of 2024. The company has made substantial payments throughout the year, including $37 million in the first quarter and $30 million in April. Additionally, it anticipates retiring another $15 to $20 million of its debt in the third quarter of 2024.
The firm's analysis also points to Terawulf's potential growth through the addition of mining equipment and the utilization of its 300 megawatts (MW) of power for artificial intelligence and high-performance computing (AI/HPC) applications. Cantor Fitzgerald estimates the value of each MW for these purposes at $9 million, which translates to a projected per-share value of $8.00 for Terawulf.
This valuation reflects the firm's optimistic outlook on Terawulf's ability to capitalize on the AI/HPC theme within its market coverage. The company's strategic financial management and expansion into high-value computing areas are key factors contributing to the positive assessment by Cantor Fitzgerald.
In other recent news, TeraWulf Inc. reported significant growth in the first quarter of 2024, with GAAP revenues reaching $42.4 million, an 82% increase from the prior quarter, and a non-GAAP adjusted EBITDA of $32 million, up 95% from the previous quarter. The company's self-mining hash rate stood at 8 exahash per second using 210 megawatts of infrastructure capacity. TeraWulf also has plans to expand its infrastructure capacity to 300 megawatts by the end of 2024.
In addition to these recent developments, TeraWulf has outlined ambitious expansion plans, with the completion of 'Building 4' at its Lake Mariner site slated for the second half of 2024. Further expansion opportunities could potentially increase the company's hash rate capacity to 28.3 EH/s by the end of 2025.
Analysts from Cantor Fitzgerald have given TeraWulf an Overweight rating, indicating a positive outlook for the company. Revenue and EBITDA projections also show a promising growth trajectory, with estimates showing an increase from $69.2 million to $286.5 million in revenue and from $30.7 million to $178.3 million in EBITDA from 2023A to 2025E.
Finally, TeraWulf has been actively exploring opportunities in high-performance computing and AI applications, with plans to expand its high-density compute business to 100 megawatts. This diversification could potentially uplift the company’s valuation multiples and unlock new revenue streams.
InvestingPro Insights
In light of Cantor Fitzgerald's optimistic outlook, real-time data from InvestingPro further enriches the narrative around Terawulf Inc. (NASDAQ: WULF). The company's market capitalization stands at a robust $1030M, reflecting significant investor interest. A noteworthy metric is the company's exceptional revenue growth over the last twelve months, which has surged by an impressive 280.01%. This growth is a testament to Terawulf's expanding operations and resonates with analysts' expectations of sales growth in the current year.
InvestingPro Tips also highlight the company's stock performance, with a significant return of 23.11% over the last week and an even more remarkable 132.33% over the last year, signaling strong investor confidence. Additionally, two analysts have revised their earnings upwards for the upcoming period, suggesting potential for continued positive performance. For those looking to delve deeper into Terawulf's financials and stock analysis, InvestingPro offers additional insights and tips. To explore these, consider using the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
While Terawulf operates with a moderate level of debt and short-term obligations exceeding liquid assets, the company's strategic financial management and aggressive debt reduction align with the positive assessment by analysts. It's important to note that the stock generally trades with high price volatility, which may be of interest to investors looking for dynamic trading opportunities. With a total of 16 additional InvestingPro Tips available, investors can gain a comprehensive understanding of Terawulf's financial health and market position.
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