Crypto miner Riot Blockchain, Inc. (NASDAQ:RIOT) has managed to sustain its operations in the third quarter despite the softness in the industry. In the past week, stock prices of most cryptocurrency-related companies have slipped owing to the FTX-Alameda debacle. RIOT stock has also lost 11.1% in the past five trading days.
Riot’s Q3FY22 Results Show a Promising Trend
On November 7, Riot Blockchain reported a wider-than-expected quarterly loss of $0.24 per share, much wider than analysts’ expectations of a profit of $0.01 per share. The figure was even worse than the prior-year quarter’s loss of $0.16 per share.
Similarly, the revenue of $46.30 million missed analysts’ estimates of $56.30 million and also came in lower than the Q3FY21 revenue of $64.80 million. The steep decline in revenue was attributed to the plunge in Bitcoin (BTC-USD) prices and the curtailment of mining activities due to high energy prices in Texas.
Having said that, the same curtailment efforts enabled the company to reduce operating costs as it took advantage of a “long-term fixed rate power contract to generate significant power credits,” of a record $13.07 million.
In the quarter, Riot produced 1,042 Bitcoin, and ended the quarter with 6,766 Bitcoin. Also, Riot earned $22.07 million of mining revenue, and data center hosting revenue came in at $8.37 million due to reduced customer billings. Further, engineering revenue stood at $15.8 million in Q3.
Remarkably, during Q3, Riot reached an all-time high hash rate of 5.6 EH/s (Exa hash per second) with a deployed fleet of 55,728 miners. Going ahead, Riot expects to reach a total self-mining hash rate capacity of 12.5 EH/s in Q1FY23.
Here’s What Analysts Are Saying About RIOT’s Future
Following the Q3 print, H.C. Wainwright analyst Kevin Dede reiterated a Buy rating on RIOT stock with a price target of $17 (264.8% upside potential).
Dede is particularly optimistic about Riot’s well-diversified revenue stream, which includes Bitcoin mining, hosting revenue, and the newly added engineering revenue stream through the acquisition of ESS Metron.
Moreover, the analyst is happy with RIOT’s strong operational foundation and the progress of infrastructure development.
Similarly, analyst Darren Aftahi of Roth Capital maintained a Buy rating on RIOT stock but cut the price target to $11 (136% upside potential) from $15.
Aftahi anticipates higher margins and increased Bitcoin production in Q4 as curtailments fade and the company pursues aggressive deployment velocities.
Aftahi noted, “With lower BTC prices and higher energy costs, we again reiterate the strength we see in RIOT compared to others in the space. With owned infrastructure (most of which at Whinstone is complete), a power purchase agreement (PPA) in place, and ~$391.5M in cash and BTC (3Q cash and Oct. BTC holdings), we believe RIOT has positioned itself well to help withstand softness in the industry.”
Is RIOT a Buy Right Now?
On TipRanks, analysts have awarded the stock a Strong Buy consensus rating based on seven Buys and one Hold. Also, the average Riot Blockchain price target of $11.79 implies an impressive 153% upside potential to current levels. Meanwhile, the stock has lost 79.5% year to date.
Ending Thoughts
Riot Blockchain stock is certainly a good long-term bet, with its current stock price trading far from its 52-week high of $46.28. Furthermore, Riot is taking bold steps to improve mining production, hash rate capacity, and infrastructure. Also, analysts are highly bullish about Riot’s future trajectory. Moreover, the average 12-month price target displays a very attractive upside potential for investors.
