Is Bitfarms' (CVE:BITF) Share Price Gain Of 184% Well Earned?

By
Simply Wall St
Published
December 18, 2020
TSXV:BITF

When you buy shares in a company, there is always a risk that the price drops to zero. On the other hand, if you find a high quality business to buy (at the right price) you can more than double your money! For example, the Bitfarms Ltd. (CVE:BITF) share price has soared 184% return in just a single year. Better yet, the share price has gained 297% in the last quarter. This could be related to the recent financial results, released recently - you can catch up on the most recent data by reading our company report. We'll need to follow Bitfarms for a while to get a better sense of its share price trend, since it hasn't been listed for particularly long.

See our latest analysis for Bitfarms

Bitfarms wasn't profitable in the last twelve months, it is unlikely we'll see a strong correlation between its share price and its earnings per share (EPS). Arguably revenue is our next best option. Generally speaking, companies without profits are expected to grow revenue every year, and at a good clip. That's because it's hard to be confident a company will be sustainable if revenue growth is negligible, and it never makes a profit.

Over the last twelve months, Bitfarms' revenue grew by 27%. That's a fairly respectable growth rate. While that revenue growth is pretty good the share price performance outshone it, with a lift of 184% as mentioned above. If the profitability is on the horizon then now could be a very exciting time to be a shareholder. Of course, we are always cautious about succumbing to 'fear of missing out' when a stock has shot up strongly.

The graphic below depicts how earnings and revenue have changed over time (unveil the exact values by clicking on the image).

earnings-and-revenue-growth
TSXV:BITF Earnings and Revenue Growth December 18th 2020

You can see how its balance sheet has strengthened (or weakened) over time in this free interactive graphic.

A Different Perspective

Bitfarms shareholders should be happy with the total gain of 184% over the last twelve months. A substantial portion of that gain has come in the last three months, with the stock up 297% in that time. Demand for the stock from multiple parties is pushing the price higher; it could be that word is getting out about its virtues as a business. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. For instance, we've identified 5 warning signs for Bitfarms (1 is potentially serious) that you should be aware of.

We will like Bitfarms better if we see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on CA exchanges.

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This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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