On Thursday, Needham maintained a Buy rating on Riot Platforms (NASDAQ:RIOT) stock and increased the price target to $14 from $13. The adjustment follows Riot Platforms' latest financial results, which revealed a slight outperformance in revenue but a miss in adjusted EBITDA, excluding bitcoin fair value changes.
The company's revenue exceeded expectations due to a rise in engineering and hosting revenue, with engineering returning to profitability this quarter. However, the adjusted EBITDA fell short of estimates primarily due to elevated selling, general, and administrative (SG&A) expenses.
Management at Riot Platforms reiterated their strategic focus on bitcoin mining, expressly stating they have no plans to venture into high-performance computing (HPC) or artificial intelligence (AI), which they consider a distraction.
The reported revenues were $70 million compared to the $65 million projected, while adjusted EBITDA came in at $1 million, significantly lower than the anticipated $16 million. Earnings per share (EPS) were reported at a loss of $0.32, against an estimated profit of $0.22.
Despite the mixed financial outcomes, Riot Platforms announced an increase in their hash rate guidance for the years 2024 and 2025, signaling potential growth in their bitcoin mining capacity. This update is seen as a positive development, although concerns about potential equity dilution and the ongoing high SG&A costs remain.
In light of the acquisition of Block Mining and the anticipated higher hash rates in 2025, Needham has revised Riot Platforms' revenue and adjusted EBITDA estimates for 2024. These revisions, coupled with the higher estimates for 2025, have led to the new price target of $14.
In other recent news, Riot Platforms, a major player in the cryptocurrency mining industry, has seen a series of developments. Following the company's latest financial results, which showed a slight outperformance in revenue but a miss in adjusted EBITDA, Needham maintained a Buy rating on Riot Platforms and increased the price target to $14 from $13.
The company's revenue exceeded expectations due to a rise in engineering and hosting revenue, with engineering returning to profitability this quarter. However, the adjusted EBITDA fell short of estimates primarily due to elevated selling, general, and administrative expenses.
In a significant strategic move, Riot Platforms has acquired Block Mining. This acquisition, which bolsters its operational capacity, was valued at approximately $92.5 million and grants Riot Platforms immediate access to 60 megawatts of power, equating to 1 exahash per second of mining capacity, with the prospect of expanding to roughly 305 megawatts by the end of 2025.
In light of the acquisition and the anticipated higher hash rates in 2025, Needham has revised Riot Platforms' revenue and adjusted EBITDA estimates for 2024. These revisions, coupled with the higher estimates for 2025, have led to the new price target of $14.
Stifel Canada initiated coverage on Riot Platforms with a Speculative Buy rating and a price target set at $18.00, highlighting the company's potential to become the largest Bitcoin miner. Roth/MKM maintained its Buy rating on Riot Platforms stock, with a $20.00 price target, following Riot's recent acquisition of Block Mining.
InvestingPro Insights
Following Needham's optimistic outlook on Riot Platforms, InvestingPro data and tips provide additional context for investors considering the company's stock. With a market capitalization of $2.94 billion and a P/E ratio of 14.63, Riot Platforms appears to be trading at a reasonable valuation relative to its near-term earnings growth. This is supported by an adjusted P/E ratio for the last twelve months as of Q1 2024 sitting at 21.03, which when combined with a PEG ratio of just 0.17, suggests potential for growth at a rate that could justify this earnings multiple.
According to InvestingPro Tips, Riot Platforms holds more cash than debt on its balance sheet, which is a strong indicator of financial stability. Additionally, analysts expect net income and sales to grow this year, providing a positive outlook for the company's profitability. On the other hand, the company is identified as quickly burning through cash, which could raise concerns about long-term sustainability if not managed effectively. Investors should note that Riot Platforms does not pay a dividend, which might influence the investment decisions of income-focused shareholders.
For those interested in digging deeper into Riot Platforms' financial health and future prospects, InvestingPro offers a wealth of additional tips—15 in total—that can help investors make more informed decisions. The full list of insights, including analyses on valuation multiples and stock price volatility, is available on the InvestingPro platform.
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