Is RIOT stock a buy? (July, 2024)

Crypto is set to rise and the best way to play it is Riot Platforms (Riot Platforms Stock Quote, Chart, News, Analysts, Financials NYSE:RIOT).

So says Roth MKM analyst Darren Aftahi, who in an update to clients July 19 maintained his “Buy” rating and price target of $20.00 on RIOT.

The analyst explained why he is bullish on the sector.

“With BTC recently seeing a selloff after hitting all-time highs, we believe both it and BTC miners are set up well to see material gains going forward. First both Mt. Gox and the German government have weighed on BTC price in the last several weeks,” he wrote. “The German government, according to multiple crypto trade journals that track wallet movement, have suggested selling is done. Second, unlike prior posthalving cycles, the introduction of BTC ETFs act as an ongoing bid for BTC. Additionally, ETF inflows have seen solid traction, with ~$1B this past month. Adding more fuel to the fire, the spot Ether (ETH) ETF is set for launch on July 23, adding more traction in the space. And lastly, politically speaking, we expect to see more pro-crypto (especially BTC) narratives in the coming months as it becomes a major talking point in the election cycle. We note that former President Trump is slated to speak at the BTC Nashville Conference late the following week. Also, candidate Trump and his administration are supportive of the asset class, which, if he is elected, should act as a tailwind for the entire crypto industry. We note Polymarket places a 63% chance of Donald Trump being the next U.S. president. Collectively, we believe this sets up crypto and BTC well for the coming 12-18 months. Furthermore, we note BTC has seen material appreciation in the 18-month period following each halving (April 2024). To us, this all points to higher BTC prices, which should bode well for RIOT, TeraWulf (WULF-Buy), and Bitdeer Technologies (BTDRBuy) in our coverage universe”

The analyst thinks RIOT will post EBITDA of $256.0-million on revenue of $342.2-million in fiscal 2024. In fiscal 2025, he expects EBITDA of $55.8-million on a topline of $499.9-million.

Aftahi says RIOT is “poised for material gains”.

“On a more micro level, we believe RIOT looks to be undervalued on both an EV’24 EH/s basis at ~$85M relative to peer averages at $137M. While we admit there is some HPC/AI accretion in that figure, if we look at larger pure-play BTC miners (CLSK-NC and MARANC), they trade at an average of ~$125M EH/s, or a 47% premium to RIOT. If we look at EV/’25 EBITDA multiples for pure-play larger BTC miners, RIOT trades at 7.9x EV/’25E adj. EBITDA, where MARA and CLSK trade at an average of ~12.4x, or a 57% premium,” he added. Given RIOT now has a clear line of sight to significantly larger scale via its Corsicana site, and guidance of 31 EH/s by the end of CY2024, we believe this implied discount is unwarranted. We would be buyers of RIOT for the aforementioned reasons.”