On Friday, Terawulf Inc. (NASDAQ:WULF) received an updated price target from B.Riley, indicating a positive outlook on the company's potential in the high-performance computing (HPC) sector. The firm has increased the price target to $6.00, up from the previous $5.00, while maintaining a "Buy" rating on the stock.
The analyst from B.Riley highlighted that Terawulf's focus on the HPC opportunity has garnered significant interest following the recent Coreweave-Core Scientific transaction. The company's Lake Mariner site, covering 1,800 acres in Upstate New York, is strategically positioned with dual transmission lines and multiple internet service providers, which is seen as an attractive feature for potential customers and investors.
Currently, Terawulf aims to first reach a capacity of 300 megawatts (MW), with plans to expand the total capacity of the site to 500 MW. There is also potential to scale up to over 700 MW, contingent on the completion of transmission studies and upgrades, which are estimated to cost between $10 million and $20 million and could take one to two years.
Management at Terawulf has expressed confidence in their ability to secure a deal that could contribute to revenue and EBITDA by the second half of 2025. They also believe that the financing for the colocation capacity could be achieved through a mix of prepayments and debt financing, with interest rates between 6% and 8%.
The upward revision of the price target from $5 to $6 is based on adjusted assumptions about the company's HPC operations, with B.Riley's analysis suggesting that Terawulf's Lake Mariner site fulfills all the requirements for a robust HPC partnership. The firm's management is optimistic about funding future expansions without the need for additional equity, relying on the strategic advantages of their location.
In other recent news, Terawulf Inc. has seen substantial developments. Cantor Fitzgerald recently raised its financial outlook for Terawulf, lifting the price target to $9.00 from the previous $7.00, maintaining an Overweight rating on the stock. Similarly, B.Riley increased its price target for Terawulf shares to $5.00, citing the company's potential to leverage High-Performance Computing (HPC) and the strategic value of its Lake Mariner facility.
In the first quarter of 2024, Terawulf reported robust growth 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 plans to expand its infrastructure capacity to 300 megawatts by the end of 2024.
Terawulf has ambitious expansion plans, with the completion of 'Building 4' at its Lake Mariner site scheduled for the second half of 2024. The company is also actively exploring opportunities in high-performance computing and AI applications, with plans to expand its high-density compute business to 100 megawatts. Analysts from Cantor Fitzgerald and B.Riley have given Terawulf positive ratings, indicating a positive outlook for the company.
InvestingPro Insights
Following the optimistic analysis from B.Riley regarding Terawulf Inc. (NASDAQ:WULF), real-time data from InvestingPro further paints a picture of the company's financial landscape. With a Market Cap of approximately $1.47 billion and a substantial Revenue Growth of 280.01% in the last twelve months as of Q1 2024, Terawulf is showing signs of aggressive expansion in the high-performance computing sector. Despite the company not being profitable over the last year, as indicated by a negative P/E Ratio of -18.5, the significant revenue increase suggests a strong market interest in their offerings.
InvestingPro Tips for Terawulf indicate a high level of volatility in stock price movements, which may be of interest to investors looking for dynamic trading opportunities. Additionally, the company is trading at a high revenue valuation multiple, reflecting the market's high expectations for future growth. For those considering an investment in Terawulf, it's worth noting that the company does not pay dividends, which could be a factor for income-focused portfolios.
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