Riot Platforms, Inc

Riot Platforms, Inc (NYSE: RIOT) Riot Platforms, Inc. is a company specializing in Bitcoin mining and digital infrastructure. It operates Bitcoin mining facilities in central Texas and Kentucky, and conducts electrical switchgear engineering and fabrication in Denver, Colorado. The company’s operations are divided into two segments: Bitcoin Mining and Engineering.

Key Business & Financial Updates

• Second Quarter 2024 Financial Performance: Total revenue was USD 70.0 million, down from USD 76.7 million during the same three-month period in 2023. This decline was mainly due to a USD 9.7 million reduction in Engineering revenues, partially offset by a USD 6 million rise in Bitcoin Mining revenue. Bitcoin Mining revenue for the quarter was USD 55.8 million, up from USD 49.7 million during the same three-month period in 2023. This increase was mainly due to higher average Bitcoin prices and a rise in operational hash rate, though it was partially offset by increased network difficulty and the block subsidy 'halving' event. The excess of Engineering revenue over Engineering cost of revenue for the quarter was USD 1.4 million, representing 15% of Engineering revenue. This compares to USD 1.1 million, or 6% of Engineering revenue, for the same three-month period in 2023.
• Increase in Selling, General, and Administrative Expenses: Selling, general, and administrative expenses for the quarter amounted to USD 61.2 million, up USD 41.4 million from the same period in 2023. This rise was mainly due to a USD 32.1 million increase in stock compensation expenses from new long-term incentive grants, and a USD 3.8 million rise in advisory expenses related to ongoing M&A activity.
• Production Update: In July 2024, Riot Platforms increased Bitcoin production by 45% from June and made a new acquisition, expanding into a new market. The company mined 370 Bitcoin, benefiting from enhanced hash rate deployment and strong performance from its Corsicana Facility. Ongoing improvements at the Rockdale Facility are expected to boost operating uptime.
• Strategic Expansion: On August 13, 2024, Riot acquired 1,000,000 common shares of the Bitfarms Ltd, representing about 0.22% of the issued shares. The shares were purchased through normal trading on the Nasdaq Stock Market and other open market transactions at an average price of approximately USD 2.28 per share. In July 2024, Riot acquired Block Mining Inc., a Kentucky-based Bitcoin miner with 60 MW capacity. With expansion opportunities, capacity could exceed 300 MW by 2025. Riot aims for over 2 GW of capacity, leveraging its balance sheet and expertise to build top-tier mining facilities.

Business Outlook

In July 2024, Riot significantly advanced by increasing Bitcoin production by 45% from June 2024 while acquiring and expanding into a new market. The company mined 370 Bitcoin, benefiting from enhanced hash rate deployment at the Corsicana Facility and strong performance from its systems. Continued improvements at the Rockdale Facility are expected to further boost operational uptime. After acquiring Block Mining, Riot revised its 2024 deployed hash rate forecast from 31 EH/s to 36 EH/s and also raised its 2025 forecast from 40 EH/s to 56 EH/s.

Technical Observation (on the daily chart):

The Relative Strength Index (RSI) over a 14-day period stands at a value of 40.16, recovering from oversold zone, with the expectations of upward momentum if USD 7.50-USD 8.00 support levels sustain. A break below USD 7 level can lead the stock price to next important support of around USD 5.00 levels. Additionally, the stock's current positioning is below both 50-Day SMA and 200-Day SMA, which can act as a short to medium term resistance levels.

As per the above-mentioned price action, momentum in the stock over the last month, current macroeconomic scenarios, recent business & financial updates, and technical indicators analysis, a ‘Speculative Buy’ rating has been given to Riot Platforms, Inc (NYSE: RIOT) at the closing market price of USD 8.04 as of August 20, 2024. 

Individuals can evaluate the stock based on the support and resistance levels provided in the report in case of keen interest taking into consideration the risk-reward scenario. 

Markets are trading in a highly volatile zone currently due to certain macro-economic issues and prevailing geopolitical tensions. Therefore, it is prudent to follow a cautious approach while investing.

Related Risk: This report may be looked at from a high-risk perspective and a recommendation is provided for a short duration. This report is solely based on technical parameters, and the fundamental performance of the stocks has not been considered in the decision-making process. Other factors which could impact the stock prices include market risks, regulatory risks, interest rates risks, currency risks, social and political instability risks etc. 

Note 1: Past performance is not a reliable indicator of future performance.

Note 2: The reference date for all price data, currency, technical indicators, support, and resistance level is August 20, 2024. The reference data in this report has been partly sourced from REFINITIV.

Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above.

Note 4: Target Price refers to a price level that the stock is expected to reach as per the relative valuation method and or technical analysis taking into consideration both short-term and long-term scenarios.

Note 5: ‘Kalkine reports are prepared based on the stock prices captured either from the New York Stock Exchange (NYSE), NASDAQ Capital Markets (NASDAQ), and or REFINITIV. Typically, all sources (NYSE, NASDAQ, or REFINITIV) may reflect stock prices with a delay which could be a lag of 15-20 minutes. There can be no assurance that future results or events will be consistent with the information provided in the report. The information is subject to change without any prior notice.