Riot Platforms, Inc. RIOT has seen a sharp drop of 52.7% in its stock price since
the beginning of the year, in stark contrast to the 25.1% growth witnessed in its sector and the 19.6%
uptick in the Zacks S&P 500 composite.
This decline echoes the performance of other cryptocurrency-focused entities such as Cipher
Mining CIFR and Marathon Digital MARA, which have
plunged 27.6% and 31.6% respectively in the same period.
The Tale of the Tape
Image Source: Zacks Investment Research
The recent closing price of RIOT stands at $7.33, precarious near its 52-week low of $6.36, languishing
below its 50-day moving average, signaling a bearish outlook among investors.
Given RIOT’s continued vulnerability, investors may now be deliberating on the auspicious timing to enter
the market. However, the waters seemingly run deep.
The Aftermath of the Halving and Financial Turbulence
One pivotal factor underpinning RIOT’s descent is the semblance of the Bitcoin halving event, imposing
formidable operational hurdles on miners, including Riot. The halving dictates that each ASIC miner must
now toil doubly hard to mine an identical quantum of Bitcoin, without a commensurate elevation in Bitcoin
prices to offset this escalated difficulty. The production of Bitcoin by Riot shrunk by 13% sequentially
in August 2024, glaring at the operational inefficiencies and emboldened challenges veiling the
company.
The dwindling production underscores the broader quagmires confronting Riot in its mining endeavors. Circling
back to the second quarter of 2024, the company mined 844 Bitcoins, plummeting 52% year over year. This
slump is chiefly ascribed to a momentous spike in the Bitcoin network difficulty since January 2023. These
operational stumbles have thrust the company into a precarious financial perch, potentially teetering
towards further share dilution as it scours for funding, hence foreshadowing additional losses for
stakeholders.
Ebbing Estimates for RIOT
Over the past 60 days, four estimates for 2024 have veered southwards versus no northward projections. Meanwhile,
the Zacks Consensus Estimate for 2024 earnings has slumped by a substantial 75.9%. This nosedive paints
a picture of faltering confidence among analysts in the company’s near-term capacity to revamp its
financial gamut.
An Uncertain Stance on Market Entry
Though the allure of buying during this crepuscular hour may tug at certain investors’ instincts, RIOT’s present
operational wrangles, intertwined with the somber 2024 earnings forecast revisions by analysts,
proffer a vista of unpredictability.
Amidst RIOT’s staggering year-to-date slump and the formidable hurdles following the Bitcoin halving, a
prudent “Hold” counsel seems judicious. The post-halving epoch has steepened the mining terrain,
with RIOT’s Bitcoin yield tapering in August 2024, mirroring the operational lapses. Moreover, the
substantial dip in Bitcoin mined through Q2 of the same year and a perceptible upswing in Bitcoin network
difficulty corroborate the augmented financial hazards weighing on the company.
Consequently, investors are implored to assume a vigilant stance, gauging Riot’s adeptness in surmounting the
post-halving quagmires prior to diving further into investment deliberations.
RIOT presently upholds a Zacks Rank #3 (Hold).
