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Is Riot Platforms Positioned for a Major Breakthrough in Bitcoin Mining?

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Written by Timothy Sykes Reviewed by Jack Kellogg Fact-checked by Ellis Hobbs
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Riot Platforms Inc. is experiencing a positive stock surge, spurred by investor optimism and recent strategic developments in the cryptocurrency mining industry. On Thursday, Riot Platforms Inc.’s stocks have been trading up by 3.99 percent.

Market Highlights:

  • Riot Platforms has reported a remarkable surge in Bitcoin production for September, with a 28% increase from August and a 14% increase year-over-year. This uptick positions Riot as a key player in the cryptocurrency mining sector.
  • Roth MKM maintains a Buy rating on Riot, setting a price target of $20, emphasizing the firm’s increased hash rate and operational uptime as pivotal growth factors.
  • Macquarie’s initiation of Riot with an ‘Outperform’ rating underscores the company’s significant scale and vertical integration in Bitcoin mining, reflecting growing confidence from financial analysts.

Candlestick Chart

Live Update at 16:03:30 EST: On Thursday, October 24, 2024 Riot Platforms Inc. stock [NASDAQ: RIOT] is trending up by 3.99%! Discover the key drivers behind this movement as well as our expert analysis in the detailed breakdown below.

Quick Overview of Riot Platforms Inc.’s Recent Financials

Riot Platforms, a prominent name in Bitcoin mining, has showcased a swift upward momentum. Assessing their latest earnings reveals both strengths and challenges. With a revenue of roughly $280.68M and a current EBITDA margin showing in the negatives, the company presents a mixed bag in terms of profitability. Notably, the company’s EBIT margin stands at -99.6, indicating substantial operational challenges, yet the gross margin around 20.7% offers a glimmer of profitability potential.

In recent weeks, Riot’s stock has experienced fluctuations. From Oct 1 to Oct 24, the stock price ranged between $7.08 and $10.19, signaling substantial volatility. Such movements are common in the cryptocurrency sector, where external factors like Bitcoin’s price and regulatory announcements can drastically affect trading behavior.

Despite operational hurdles, Riot’s financial strength is apparent in its low debt levels, boasting a total debt-to-equity ratio of just 0.01. The company’s cash position remains strong at over $480M, supported by a high current ratio of 9.7. These numbers indicate a robust buffer against short-term financial pressures.

From a valuation standpoint, the price-to-sales ratio stands at 10.59, which may appear high; however, it’s not uncommon in the rapidly evolving tech-driven bitcoin mining market. Investors looking at Riot may see potential given its unique position in the market and macro trends favoring digital asset growth.

More Breaking News

While operating cash flow remains negative, Riot’s significant capital investments—$139.47M in net investment changes—highlight its commitment to future growth. They aim to leverage increased operational efficiencies and market expansion.

Recent Developments and Their Impact on the Market

The cryptocurrency market has seen significant movements, with Bitcoin recently surpassing $66,000. Such rallies often influence stocks like Riot, as they are heavily tied to digital asset valuations. Riot’s improvements in mining efficiency and operational uptime are turning heads, suggesting a promising future trajectory.

Riot’s increase in Bitcoin production aligns well with the macroeconomic trend of rising crypto prices. Concurrently, Macquarie’s positive outlook on Riot brings further credibility and potentially attracts more investment. Roth MKM’s $20 price target indicates a bullish sentiment, bolstered by Riot’s capacity to enhance its mining operations.

These favorable market dynamics, coupled with substantial industry endorsements, could propel Riot towards a more robust financial position. Investors may see Riot’s enhanced operational metrics and strategic positioning as indicators of its resilience and potential to thrive amidst the evolving cryptocurrency landscape.

Conclusion

Riot Platforms is at a pivotal point, showcasing positive indicators in Bitcoin production and receiving supportive analyst ratings. With a strong cash reserve and improved hash rates, Riot is well-positioned to capitalize on the bullish trends in the cryptocurrency market. While challenges like negative margins persist, the trajectory of digital asset growth and Riot’s strategic positioning provide reasons for cautious optimism. As the market continues to observe Bitcoin’s dynamics, Riot’s progress in operational efficiency and its influence on its stock price will be critical for potential investors to consider.

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The available research on day trading suggests that most active traders lose money. Fees and overtrading are major contributors to these losses.

A 2000 study called “Trading is Hazardous to Your Wealth: The Common Stock Investment Performance of Individual Investors” evaluated 66,465 U.S. households that held stocks from 1991 to 1996. The households that traded most averaged an 11.4% annual return during a period where the overall market gained 17.9%. These lower returns were attributed to overconfidence.

A 2014 paper (revised 2019) titled “Learning Fast or Slow?” analyzed the complete transaction history of the Taiwan Stock Exchange between 1992 and 2006. It looked at the ongoing performance of day traders in this sample, and found that 97% of day traders can expect to lose money from trading, and more than 90% of all day trading volume can be traced to investors who predictably lose money. Additionally, it tied the behavior of gamblers and drivers who get more speeding tickets to overtrading, and cited studies showing that legalized gambling has an inverse effect on trading volume.

A 2019 research study (revised 2020) called “Day Trading for a Living?” observed 19,646 Brazilian futures contract traders who started day trading from 2013 to 2015, and recorded two years of their trading activity. The study authors found that 97% of traders with more than 300 days actively trading lost money, and only 1.1% earned more than the Brazilian minimum wage ($16 USD per day). They hypothesized that the greater returns shown in previous studies did not differentiate between frequent day traders and those who traded rarely, and that more frequent trading activity decreases the chance of profitability.

These studies show the wide variance of the available data on day trading profitability. One thing that seems clear from the research is that most day traders lose money .

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Citations for Disclaimer

Barber, Brad M. and Odean, Terrance, Trading is Hazardous to Your Wealth: The Common Stock Investment Performance of Individual Investors. Available at SSRN: “Day Trading for a Living?”

Barber, Brad M. and Lee, Yi-Tsung and Liu, Yu-Jane and Odean, Terrance and Zhang, Ke, Learning Fast or Slow? (May 28, 2019). Forthcoming: Review of Asset Pricing Studies, Available at SSRN: “https://ssrn.com/abstract=2535636”

Chague, Fernando and De-Losso, Rodrigo and Giovannetti, Bruno, Day Trading for a Living? (June 11, 2020). Available at SSRN: “https://ssrn.com/abstract=3423101”