CleanSpark, Inc.'s (NASDAQ:CLSK) 145% Jump Shows Its Popularity With Investors

Despite an already strong run, CleanSpark, Inc. (NASDAQ:CLSK) shares have been powering on, with a gain of 145% in the last thirty days. The last 30 days were the cherry on top of the stock's 710% gain in the last year, which is nothing short of spectacular.

Since its price has surged higher, CleanSpark may be sending very bearish signals at the moment with a price-to-sales (or "P/S") ratio of 19.3x, since almost half of all companies in the Software industry in the United States have P/S ratios under 4.3x and even P/S lower than 1.8x are not unusual. However, the P/S might be quite high for a reason and it requires further investigation to determine if it's justified.

View our latest analysis for CleanSpark

How CleanSpark Has Been Performing

CleanSpark certainly has been doing a good job lately as it's been growing revenue more than most other companies. The P/S is probably high because investors think this strong revenue performance will continue. If not, then existing shareholders might be a little nervous about the viability of the share price.

Keen to find out how analysts think CleanSpark's future stacks up against the industry? In that case, our free report is a great place to start.

How Is CleanSpark's Revenue Growth Trending?

The only time you'd be truly comfortable seeing a P/S as steep as CleanSpark's is when the company's growth is on track to outshine the industry decidedly.

Taking a look back first, we see that the company grew revenue by an impressive 75% last year. The latest three year period has also seen an incredible overall rise in revenue, aided by its incredible short-term performance. Accordingly, shareholders would have been over the moon with those medium-term rates of revenue growth.

Shifting to the future, estimates from the three analysts covering the company suggest revenue should grow by 78% over the next year. Meanwhile, the rest of the industry is forecast to only expand by 15%, which is noticeably less attractive.

With this information, we can see why CleanSpark is trading at such a high P/S compared to the industry. Apparently shareholders aren't keen to offload something that is potentially eyeing a more prosperous future.

What Does CleanSpark's P/S Mean For Investors?

Shares in CleanSpark have seen a strong upwards swing lately, which has really helped boost its P/S figure. Typically, we'd caution against reading too much into price-to-sales ratios when settling on investment decisions, though it can reveal plenty about what other market participants think about the company.

As we suspected, our examination of CleanSpark's analyst forecasts revealed that its superior revenue outlook is contributing to its high P/S. It appears that shareholders are confident in the company's future revenues, which is propping up the P/S. It's hard to see the share price falling strongly in the near future under these circumstances.

It is also worth noting that we have found 3 warning signs for CleanSpark (2 shouldn't be ignored!) that you need to take into consideration.

It's important to make sure you look for a great company, not just the first idea you come across. So if growing profitability aligns with your idea of a great company, take a peek at this free list of interesting companies with strong recent earnings growth (and a low P/E).

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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.