Riot Platforms’s Stock Gains New Analyst Coverage, Sees 23% Upside

Riot Platforms' stock (NASDAQ:RIOT) has pulled back sharply from recent highs, dropping more than 25% in less than two weeks.

There could be a shift in the months ahead if the latest analyst initiation is correct. Citi initiated coverage on the Bitcoin mining firm with a Neutral rating and a price target of $13.75, suggesting a potential upside of approximately 23% from current levels.

The recent price action reflects a sharp downturn from the high $14 range seen towards the end of July, as crypto related names take a pause.

Riot Platforms operates within the volatile cryptocurrency market, making its stock price highly sensitive to Bitcoin's movements and overall market sentiment. The company's 52-week range, spanning from $6.19 to $15.87, underscores this volatility. While the stock is up over 32% in the past year, recent selling pressure has erased a significant portion of those gains, with RIOT having dropped 3.88% in the past 6 months.

From a technical perspective, RIOT is currently trading below its short-term and medium-term moving averages, confirming the recent bearish trend. 

Despite the recent price decline, analyst sentiment remains generally positive. The consensus 12-month price target for RIOT is $17.36, with individual targets ranging from $11 to $24.

Citi's Neutral rating and $13.75 price target present a more cautious outlook compared to the broader consensus, reflecting concerns about near-term performance. Currently, four analysts rate the stock as a ‘Strong Buy', whilst ten have the stock at  “Buy,” indicating confidence in the company's long-term potential. This is offset by three firms at ‘Hold'.

Recent developments, including the acquisition of Block Mining, are aimed at bolstering Riot's operational capabilities. The acquisition was expected to increase Riot's hashrate targets to 36.3 EH/s by the end of 2024 and 56.6 EH/s by the end of 2025. This strategic move is designed to solidify Riot's position as one of the largest U.S.-listed miners.

Furthermore, Riot is exploring AI and High-Performance Computing (HPC) applications by utilizing the remaining 600 MW power capacity at its Corsicana Facility, which could diversify revenue streams and provide more stable income.

Needham analyst John Todaro maintained a Buy rating on Riot Platforms but reduced the price target from $15 to $13 ahead of the company's second-quarter earnings release, anticipating lower bitcoin production impacting revenue and adjusted EBITDA. This adjustment aligns with the broader market concerns about the near-term profitability of Bitcoin mining companies.