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Riot Blockchain, Inc. (RIOT) is involved in building, supporting and managing the ecosystem of blockchain technologies and mining of digital currency. The company also provides accounting, auditing and verification services for blockchain-based assets, such as cryptocurrencies.
Bitcoin has grown more than 250% in the past nine months, almost reaching its all-time high before diving yesterday. However, the Fed’s historically low interest rates combined with the slow recovery of the US economy (as indicated by rising unemployment) could help bitcoin rebound quickly. Also, looking for coverage against the weak dollar could help bitcoin return to its bull run.
The adoption of bitcoin this year by the fintech giant PayPal (PYPL) can increase RIOT’s bitcoin mining segment. The stock gained 532.1% year to date. This impressive performance, combined with many other factors, has helped RIOT earn a “Strong Buy” rating in our proprietary rating system.
Here’s how our owner is POWR ratings the system evaluates RIOT:
Commercial grade: A.
RIOT is currently trading above its 50 and 200-day moving averages of $ 3.71 and $ 2.49 respectively, indicating the stock is in an uptrend. The stock has gained 97.8% over the past three months, reflecting a solid short-term bullish trend.
RIOT’s revenue increased 41.5% year-to-date to $ 2.46 million in the third quarter ending September 2020. The increase in revenue was primarily attributable to the growth in bitcoin mining revenue.
RIOT recently purchased an additional 2,500 next-generation S19 Pro Antminer cryptocurrencies for $ 6.10 million from BitmainTech. Expanding its mining business will help the company reach 842 PH / s in operational hash rate by the end of December 2020.
Buy and hold grade: A.
In terms of proximity to its 52-week high, which is a key factor that our Buy & Hold rank takes into account, RIOT is well positioned. The stock is currently trading just 6.8% below the 52-week high of $ 7.60.
The company’s net revenue has grown at a CAGR of 335.6% over the past three years. This was mainly driven by a substantial increase in revenue from mining and cryptocurrencies.
Even degree: A
RIOT currently ranks 10th out of 54 titles in Technology – Services industry. Other popular stocks in this industry are Flex Ltd. (FLEX), SYNNEX Corporation (SNX) and TTEC Holdings, Inc. (TTEC).
SNX, FLEX and TTEC gained 25.6%, 32.6% and 71.2% respectively from the start of the year. This compares to RIOT’s 532.1% returns over this period.
Sector ranking: D
The Technology – Services the industry is ranked 111th out of 123 StockNews.com sectors. Companies in this industry provide various services such as blockchain technology, digital currency mining, information technology (IT) products and supply chain and lifecycle services for mobile devices.
The COVID-19 pandemic has impacted financial markets around the world. The major economic turmoil associated with the pandemic and the stock market crash that followed has prompted more people to move from highly volatile cryptocurrencies to safer investment bets, thereby reducing their demand.
Overall POWR rating: A (strong buy)
RIOT was rated “Strong Buy” due to its impressive financial data, short and long term rally and solid price momentum, as determined by the four components of our overall POWR rating.
Bottom line
RIOT is well positioned to rally in the coming months despite gaining 532.1% year to date. As the global economy is adopting digital transactions fairly quickly, demand for bitcoin is expected to reach new highs in the near future. Additionally, as big players and retail investors shift to cryptocurrency, strengthening demand for Bitcoin is expected to accelerate RIOT’s growth. Therefore, the stock is expected to rise based on continued business growth, favorable earnings and revenue prospects, and solid financial data.
Sentiment from analysts, which gives a good sense of a stock’s future price movement, is quite impressive for RIOT. It has a file average broker rating 1, indicating favorable sentiment from analysts. The consensus EPS estimate of $ 0.02 for next year indicates a slight year-over-year improvement. The consensus revenue estimate of $ 53.30 million for next year indicates a 412.5% increase over the same period last year.
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RIOT stock traded at $ 6.25 per share on Friday afternoon, down $ 0.83 (-11.72%). Since the beginning of the year, RIOT has gained 458.04%, against a 14.56% increase in the benchmark S&P 500 over the same period.
About the author: Imon Ghosh
Imon is an investment analyst and journalist with an enthusiasm for financial research and writing. He began his career at Kantar IMRB, a leading market research and consumer advisory organization. More…
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