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Riot Blockchain (NYSE:RIOT) Stocks: Analysts Expect Strong Recovery

Riot Blockchain (NYSE:RIOT) Stocks: Analysts Expect Strong Recovery

Crypto-miner Riot Blockchain, Inc. (NASDAQ: riot) managed to maintain its operations in the third quarter despite the downturn in the industry. Last week, the share prices of most cryptocurrency-related companies declined due to the FTX-Alameda fiasco. RIOT shares have also lost 11.1% in the last five trading days.

Riot Q3 FY22 results show promising trend

On Nov. 7, Riot Blockchain reported a larger-than-expected quarterly loss of $0.24 per share, well above analysts’ expectations of earnings of $0.01 per share. That figure was even worse than the previous year’s quarterly loss of $0.16 per share.

Similarly, revenue of $46.30 million fell short of analysts’ estimates of $56.30 million and was also below FY21 Q3 revenue of $64.80 million. The sharp drop in earnings has been linked to the fall of bitcoin (BTC-US dollar) prices and the cessation of mining due to high energy prices in Texas.

Having said that, the same downsizing efforts enabled the company to cut operating costs as it took advantage of a record $13.07 million worth of “long-term, fixed-rate electricity contract to secure significant electricity loans.”

For the quarter, Riot produced 1,042 bitcoins and ended the quarter with 6,766 bitcoins. In addition, Riot earned $22.07 million from mining and $8.37 million in data center hosting revenue due to declining customer accounts. In addition, third-quarter engineering revenue was $15.8 million.

Notably, during the third quarter, Riot achieved an all-time high hash rate of 5.6 EH/s (Exa hash per second) with a deployed fleet of 55,728 miners. Looking ahead, Riot expects to reach a total self-mining hash power of 12.5 EH/s in the first quarter of FY23.

Here’s what analysts say about the future of RIOT

Following the release of the Q3 report, HC Wainwright analyst Kevin Dede reaffirmed his Buy recommendation on RIOT stock with a target price of $17 (264.8% upside potential).

Dede is particularly optimistic about Riot’s well-diversified revenue stream, which includes bitcoin mining, hosting revenue, and a newly added engineering revenue stream through its acquisition of ESS Metron.

In addition, the analyst is pleased with RIOT’s solid operational foundation and infrastructure development progress.

Similarly, Roth Capital analyst Darren Aftahy maintained his Buy recommendation on RIOT stock, but cut his price target to $11 (136% upside potential) from $15.

Aftahi expects higher margins and more bitcoin production in the fourth quarter as restrictions fade and the company pursues aggressive rollout rates.

Aftahi noted, “With lower BTC prices and higher energy costs, we reaffirm the strength we see in RIOT compared to others in the space. With its own infrastructure (much of which is completed at Whinstone), a Power Purchase Agreement (PPA), and approximately $391.5M in cash and BTC (Q3 cash and BTC stock in October), we believe RIOT is well positioned to help withstand the industry’s softness.”

Should you buy RIOT right now?

At TipRanks, analysts assigned the stock a Strong Buy consensus rating based on seven buys and one hold. Additionally, Riot Blockchain’s $11.79 average price target suggests an impressive upside of 153% to current levels. Meanwhile, stocks have lost 79.5% since the beginning of the year.

Ending thoughts

Riot Blockchain stock is certainly a good long-term bet as its current share price is trading far from its 52-week high of $46.28. In addition, Riot is taking bold steps to improve mining, hashing power, and infrastructure. In addition, analysts are very optimistic about Riot’s future trajectory. In addition, the 12-month average target price shows very attractive upside potential for investors.

Information disclosure

The views and opinions expressed herein are those of the author and do not necessarily reflect the views and opinions of Nasdaq, Inc.

Written by khirou

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