CleanSpark, Inc.'s (NASDAQ:CLSK) Shares Leap 25% Yet They're Still Not Telling The Full Story

Those holding CleanSpark, Inc. (NASDAQ:CLSK) shares would be relieved that the share price has rebounded 25% in the last thirty days, but it needs to keep going to repair the recent damage it has caused to investor portfolios. Still, the 30-day jump doesn't change the fact that longer term shareholders have seen their stock decimated by the 53% share price drop in the last twelve months.

Although its price has surged higher, you could still be forgiven for feeling indifferent about CleanSpark's P/S ratio of 5.4x, since the median price-to-sales (or "P/S") ratio for the Software industry in the United States is also close to 4.5x. While this might not raise any eyebrows, if the P/S ratio is not justified investors could be missing out on a potential opportunity or ignoring looming disappointment.

We've discovered 4 warning signs about CleanSpark. View them for free.

See our latest analysis for CleanSpark

How Has CleanSpark Performed Recently?

Recent times have been advantageous for CleanSpark as its revenues have been rising faster than most other companies. It might be that many expect the strong revenue performance to wane, which has kept the P/S ratio from rising. If not, then existing shareholders have reason to be feeling optimistic about the future direction 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.

Do Revenue Forecasts Match The P/S Ratio?

In order to justify its P/S ratio, CleanSpark would need to produce growth that's similar to the industry.

If we review the last year of revenue growth, the company posted a terrific increase of 118%. This great performance means it was also able to deliver immense revenue growth over the last three years. Accordingly, shareholders would have been over the moon with those medium-term rates of revenue growth.

Looking ahead now, revenue is anticipated to climb by 95% during the coming year according to the nine analysts following the company. With the industry only predicted to deliver 15%, the company is positioned for a stronger revenue result.

In light of this, it's curious that CleanSpark's P/S sits in line with the majority of other companies. It may be that most investors aren't convinced the company can achieve future growth expectations.

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

CleanSpark's stock has a lot of momentum behind it lately, which has brought its P/S level with the rest of the industry. Generally, our preference is to limit the use of the price-to-sales ratio to establishing what the market thinks about the overall health of a company.

Despite enticing revenue growth figures that outpace the industry, CleanSpark's P/S isn't quite what we'd expect. Perhaps uncertainty in the revenue forecasts are what's keeping the P/S ratio consistent with the rest of the industry. This uncertainty seems to be reflected in the share price which, while stable, could be higher given the revenue forecasts.

You need to take note of risks, for example - CleanSpark has 4 warning signs (and 1 which is concerning) we think you should know about.

If these risks are making you reconsider your opinion on CleanSpark, 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.