Riot Platforms has price target cut at ATB

Riot Platforms is making progress on its high-performance computing ambitions, but ATB Capital Markets says it’s still waiting for more proof before getting more bullish, despite the company beating Q1 revenue estimates and maintaining strong mining uptime.

ATB analyst Martin Toner is maintaining his “Outperform” rating on Riot Platforms (Riot Platforms Inc Stock Quote, Chart, News, Analysts, Financials NASDAQ:RIOT), while revising his 12-month target price to US$17.00, down from US$19.00.

On May 2, in a Q1 2025 company update, Toner noted that after markets closed on May 1, Riot reported consolidated revenue of $161.4-million, beating consensus expectations of $159.1-million, driven by Bitcoin mining revenue of $142.9-million, which exceeded his own estimate of $139.2-million. Riot also reported adjusted EBITDA (excluding Bitcoin fair value adjustments) of $31.7-million, which aligned with Toner’s forecast of $31.0-million.

“Notably, during the quarter, RIOT achieved a near-90% mining uptime, a ‘significant’ y/y improvement, according to management,” Toner said. “Direct cost to mine of $43,800 was also flat sequentially (despite a 10% increase in network difficulty), reflecting a power cost reduction from $0.038 to $0.034 per kWh. We highlight two main takeaways from this quarter: i) RIOT halted its BTC “HODL” strategy in April, selling all monthly BTC production to raise cash, which we think is prudent given the share price, and ii) RIOT provided more details on its HPC/AI pursuit at Corsicana, highlighting that the company is building out additional infrastructure to support power availability, is pursuing land expansion at Corsicana and is in ‘ongoing engagement’ with HPC/AI counterparties.”

Toner said ATB remains positive on Riot’s steady progress but believes the company still needs to demonstrate tangible results, particularly by securing a counterparty lease and financing.

“We update our estimates with higher network hash rate assumptions, partially offset by lower power cost assumptions, which drive a decrease in adj. EBITDA estimates for 2025,” he said. “We also raise our HPC DCF value assumptions slightly to reflect more conservative tax assumptions, driving up our HPC per share value up by ~$0.75 per share. Our lower adj. EBITDA estimates, partially offset by our higher HPC value drives our PT reduction to $17.00 (from $19.00).”

Toner thinks that Riot will do $180.1-million in Adjusted EBITDA on revenue of $$691.2-million in fiscal 2025. he thinks those numbers will improve to $286.5-million on revenue of $705.7-million in fiscal 2026.

ATB Capital Markets may be trimming its price target on Riot Platforms but still sees the upside as the company lays the groundwork for a high-performance computing business that could significantly expand its long-term value.

“Our 12-month price target is based on a sum-of-the-parts (SOTP) and multiples-based approach to value RIOT’s core mining operations, based on 7.0x RIOT’s 2026 EBITDA (before FV adjustments), which is unchanged,” Toner said. “We also use a DCF valuation to value RIOT’s HPC operations, which uses a WACC of 9.0% and a 3.0% terminal growth rate.

“Based on our DCF analysis, we assigned a value of $3.72 per share to RIOT’s new HPC business. For our DCF valuation, we assume that RIOT begins HPC operations in 2025e, building out 50MW initially, and gradually expands its HPC capacity to the full remaining 600MW at Corsicana by 2028e. We also assume revenue per MW to be $1.5mm with 70% EBITDA margins, and per-MW capex build-out costs of $8mm, which is conservative compared to HPC economics that peers have announced. We assume a 50% probability of a build-out, given RIOT is in the evaluation stage.”

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