The stock of Hut 8 Mining (NASDAQ:HUT)(TSE:HUT) has fallen along with the price of Bitcoin (BTC-USD). Shares of this Bitcoin mining company have dropped nearly 77% year-to-date. Furthermore, with an Underperform Smart Score on TipRanks and uncertainty over Bitcoin prices, recovery in HUT stock remains a far cry.
Before we delve deeper, let’s see why investors dumped HUT stock.
What’s Behind the Slump in HUT Stock?
It’s worth mentioning that Bitcoin and other major cryptocurrencies are under selling pressure amid a weak macro environment and a fear of recession. Meanwhile, credit tightening to tame inflation further remains a drag.
Naturally, Hut 8, which generates most of its revenues from Bitcoin mining, is bound to lose value.
HUT delivered revenues of $43.8 million in Q2, up 31% year-over-year. This growth reflects an increase in the number of Bitcoins mined during the second quarter (HUT mined 946 Bitcoins in Q2 compared to 553 in the prior year period). Further, it generated revenues of $39.1 million through Bitcoins.
While HUT’s top line improved year-over-year, it fell about 21% on a quarter-over-quarter basis. Further, the ongoing weakness in Bitcoin implies that HUT’s revenue could continue to decrease sequentially in the coming quarters.
HUT Has an Underperform Smart Score
Given the challenges, retail investors have a negative outlook on HUT stock. TipRanks’ data shows that retail investors decreased their exposure to HUT stock by 2.2% in the last 30 days. Further, insiders sold HUT stock worth C$114.7K in the last three months. Overall, HUT stock has an Underperform Smart Score of 2 out of 10 on TipRanks, implying it is more likely to trail broader market averages.
HUT stock has received one Buy and one Hold for a Moderate Buy consensus rating. Further, HUT’s average price target of $5 implies upside potential of 173.3%.
Conclusion: Recovery May Take Time
HUT’s efforts to boost Bitcoin mining will support its revenues and could drive its stock price higher in the long term. However, pressure on Bitcoin prices could restrict the upside in HUT stock in 2022, implying the recovery could take more time.
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