On Friday, Cantor Fitzgerald adjusted its price target for Terawulf Inc. (NASDAQ:WULF), increasing it to $10.00 from the previous $9.00, while reaffirming an Overweight rating on the company's stock. The firm's decision follows Terawulf's June operations update, which reported a slight decrease in Bitcoin mining production compared to May. Terawulf mined 177 Bitcoin in June, down from 186 in May, with the majority of the production coming from its Lake Mariner site.
The dip in production was partly due to the company's participation in a demand response program during a historic heatwave in the northeast, resulting in a curtailment of 2,300 MWh of energy at the Lake Mariner facility. Despite this, Terawulf's cost of power was initially set at $0.042/kWh for June, not yet accounting for the expected cost reduction benefits from the demand response program, which are estimated to reduce the cost of power by approximately $0.010/kWh.
Terawulf's average operating hash rate was reported at 7.1 EH/s for the quarter, a decrease from 7.6 EH/s in the prior month. This decline was attributed to several factors, including new S21s not being operational until late in the month, participation in demand response programs, and the optimization of rigs to maximize profits. Despite these challenges, the company's self-mining capacity reached 8.8 EH/s in June, and it is on track to meet its mid-year target of 10 EH/s.
The company is also progressing with its expansion plans, as it completes the construction of Building 4, which will add 35 MW of capacity, and continues to integrate S21 and S21 Pro units.
As the year progresses, Terawulf is expected to increasingly focus on opportunities in artificial intelligence and high-performance computing (AI/HPC). The firm anticipates that all of the 570 MW of additional capacity at Lake Mariner will be dedicated to AI/HPC data centers and workloads, and it expects the market to provide re-rating upside as Terawulf announces its first AI/HPC customer.
In other recent news, Terawulf Inc. has seen a flurry of activity from analysts with Roth/MKM initiating coverage with a Buy rating, citing the company's potential in the digital infrastructure energy demand sector. They've highlighted Terawulf's Bitcoin mining operation and potential for high-performance computing (HPC) infrastructure as key growth drivers.
Similarly, B.Riley raised its price target for Terawulf, focusing on the company's potential in the HPC sector. Cantor Fitzgerald also increased its price target, noting robust demand across various sectors.
In recent financial reports, Terawulf's first quarter of 2024 saw GAAP revenues reach $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. Looking ahead, Terawulf plans to expand the total capacity of its Lake Mariner site to 500 MW, and Cantor Fitzgerald projects Terawulf could achieve 570 MW of HPC capacity in four years, potentially generating $500 million in earnings before tax.
InvestingPro Insights
Following Cantor Fitzgerald's price target update for Terawulf Inc. (NASDAQ:WULF), investors may find the latest data and insights from InvestingPro particularly valuable. The company's market capitalization stands at approximately $1.74 billion, reflecting market confidence despite a negative P/E ratio of -21.56, which suggests that investors are expecting future growth. Indeed, analysts predict sales growth for the current year, which aligns with the company's ambitious expansion plans and focus on AI/HPC opportunities. Additionally, Terawulf's stock has shown a significant return over the last week, with a 17.08% price total return, indicating strong market performance in the short term.
Investors should note that while the company's revenue has grown substantially, with a 280.01% increase over the last twelve months as of Q1 2024, Terawulf is not currently profitable, and short-term obligations exceed its liquid assets. This financial snapshot underscores the importance of the company's strategic initiatives, such as its AI/HPC focus, to drive future profitability. For a deeper analysis and additional InvestingPro Tips, including those related to stock volatility and the company's trading multiples, investors can visit https://www.investing.com/pro/WULF. There are 10 more tips available, which can be accessed with a subscription. To get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription, use the coupon code PRONEWS24.
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