On Thursday, Riot Platforms (NASDAQ:RIOT) shares, received an updated price target from H.C. Wainwright. The firm reduced the target to $17.00 from the previous $20.00 but maintained a Buy rating on the stock. The adjustment follows Riot's first-quarter earnings report and subsequent earnings call.
Riot Platforms announced its Q1 2024 results earlier today, where it confirmed progress towards its end-of-year hash rate goal of 31.5 exahashes per second (EH/s), a significant increase from the 12.4 EH/s operational at the end of March.
The company's Bitcoin mining revenues met expectations, but its Engineering segment underperformed due to supply chain challenges and capacity limitations. However, Riot exceeded bottom-line expectations, largely due to a $234 million gain from the change in the value of Bitcoin on its balance sheet.
The company recently activated its first 400 megawatt (MW) substation at Corsicana on April 18 and is on track to deploy 16 EH/s of total capacity at this facility. Riot also anticipates having over 15 EH/s operational at its Rockdale location by the end of 2024. The firm has outlined a capital expenditure of $619 million to expand its hash rate to 41 EH/s by 2025, a plan which is reportedly fully funded.
As of March 31, Riot Platforms reported having $688.5 million in cash reserves and owning 8,490 Bitcoins, valued at approximately $486.5 million at current market prices. The Corsicana facility is expected to offer up to 1 gigawatt (GW) of total capacity upon full development, providing Riot with substantial potential for future growth.
The company estimates it could reach nearly 60 EH/s following the complete build-out of Corsicana. Additionally, Riot has secured miner purchase options with MicroBT that could enable expansion to over 100 EH/s, with a price ceiling of $16.50 per terahash (TH).
InvestingPro Insights
In light of Riot Platforms' recent earnings report and strategic updates, several metrics from InvestingPro provide a deeper financial context for investors. The company's market capitalization stands at $2.84 billion, reflecting the scale and investor interest in the cryptocurrency mining sector. Despite challenges in profitability, as indicated by a negative P/E ratio of -36.40, Riot's commitment to expanding its hash rate capacity is evident in its substantial revenue growth over the last twelve months, at 13.51%. This growth momentum is also seen in the company's quarterly revenue increase of 8.27% in Q1 2024.
From an operational perspective, Riot holds more cash than debt, which is a reassuring sign of financial stability, especially in a volatile industry like cryptocurrency mining. Additionally, analysts are anticipating sales growth in the current year, which aligns with Riot's aggressive expansion plans and could signal future financial improvements. However, the company faces challenges with weak gross profit margins, currently at 16.89%, which investors should monitor as Riot scales its operations.
For those seeking more comprehensive analysis, InvestingPro offers additional insights, including 10 more InvestingPro Tips for Riot Platforms, which can be accessed through their platform. Investors interested in leveraging these insights can use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
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