Market Cool On Bit Digital, Inc.'s (NASDAQ:BTBT) Revenues Pushing Shares 26% Lower

To the annoyance of some shareholders, Bit Digital, Inc. (NASDAQ:BTBT) shares are down a considerable 26% in the last month, which continues a horrid run for the company. Instead of being rewarded, shareholders who have already held through the last twelve months are now sitting on a 10% share price drop.

Following the heavy fall in price, Bit Digital may be sending buy signals at present with its price-to-sales (or "P/S") ratio of 3x, considering almost half of all companies in the Software industry in the United States have P/S ratios greater than 4x and even P/S higher than 10x aren't out of the ordinary. Although, it's not wise to just take the P/S at face value as there may be an explanation why it's limited.

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See our latest analysis for Bit Digital

How Bit Digital Has Been Performing

Bit Digital certainly has been doing a good job lately as it's been growing revenue more than most other companies. Perhaps the market is expecting future revenue performance to dive, which has kept the P/S suppressed. If you like the company, you'd be hoping this isn't the case so that you could potentially pick up some stock while it's out of favour.

If you'd like to see what analysts are forecasting going forward, you should check out our free report on Bit Digital.

How Is Bit Digital's Revenue Growth Trending?

The only time you'd be truly comfortable seeing a P/S as low as Bit Digital's is when the company's growth is on track to lag the industry.

Taking a look back first, we see that the company grew revenue by an impressive 139% last year. As a result, it also grew revenue by 12% in total over the last three years. Therefore, it's fair to say the revenue growth recently has been respectable for the company.

Turning to the outlook, the next year should generate growth of 37% as estimated by the four analysts watching the company. With the industry only predicted to deliver 14%, the company is positioned for a stronger revenue result.

With this in consideration, we find it intriguing that Bit Digital's P/S sits behind most of its industry peers. Apparently some shareholders are doubtful of the forecasts and have been accepting significantly lower selling prices.

What Does Bit Digital's P/S Mean For Investors?

Bit Digital's recently weak share price has pulled its P/S back below other Software companies. It's argued the price-to-sales ratio is an inferior measure of value within certain industries, but it can be a powerful business sentiment indicator.

Bit Digital's analyst forecasts revealed that its superior revenue outlook isn't contributing to its P/S anywhere near as much as we would have predicted. There could be some major risk factors that are placing downward pressure on the P/S ratio. While the possibility of the share price plunging seems unlikely due to the high growth forecasted for the company, the market does appear to have some hesitation.

You should always think about risks. Case in point, we've spotted 4 warning signs for Bit Digital you should be aware of, and 3 of them are concerning.

If these risks are making you reconsider your opinion on Bit Digital, explore our interactive list of high quality stocks to get an idea of what else is out there.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.