Riot Platforms (RIOT): Assessing Valuation After Record Bitcoin Production and New Mining Facility Expansion

If you’re wondering what to do next with Riot Platforms (RIOT), you’re not alone. The company just announced record-setting bitcoin production for August and revealed that it sold 450 bitcoin, generating $51.8 million in net proceeds. Riot’s operational update comes on the heels of opening a new mining facility, fueling chatter among investors and sparking a spike in call options activity. These are clear signs the market has taken notice of this performance.

This wave of optimism isn’t showing up in isolation. Over the past year, Riot Platforms has seen its stock price more than double, with momentum accelerating month after month. The backdrop includes strategic partnerships and expansion moves that have kept the company front and center in the blockchain technology space, reinforcing its reputation as a major player in cryptocurrency mining.

After such a sharp run higher, the question is whether investors are looking at an undervalued opportunity or if all the future growth has already been priced in. Is there still room to run, or is caution now warranted?

Most Popular Narrative: Fairly Valued

The prevailing narrative sees Riot Platforms trading close to its fair value, with analyst models indicating only a minor deviation from intrinsic worth. This assessment is based on rigorous future earnings assumptions and sector trends.

The company’s expansion of vertically integrated mining operations, with ongoing deployment of new, more efficient hardware and a continued focus on operational efficiency, supports increased hash rate and lower unit costs. This enhances Bitcoin production and potential gross profit even as mining difficulty rises.

Curious about what is powering this razor-thin fair value call? The real story lies in how analysts weigh explosive future opportunities against ongoing losses. Will Riot's extra investments in capacity pay off? Discover the growth and margin levers considered in this consensus before deciding if this outlook matches your own expectations.

Result: Fair Value of $17.28 (ABOUT RIGHT)

Have a read of the narrative in full and understand what's behind the forecasts.

However, a sharp downturn in Bitcoin prices or underutilization of new data center capacity could quickly challenge this outlook. Therefore, caution remains warranted.

Find out about the key risks to this Riot Platforms narrative.

Another View: Discounted Cash Flow Signals Upside

While the fair value narrative relies on analyst consensus and market multiples, our DCF model offers a different perspective. This approach indicates Riot Platforms could be undervalued if cash flows play out as expected. Could there be more value here than meets the eye?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Riot Platforms for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own Riot Platforms Narrative

No matter where you stand, you always have the option to dive into the numbers and form your own perspective in just a few minutes. Do it your way.

A great starting point for your Riot Platforms research is our analysis highlighting 2 key rewards and 4 important warning signs that could impact your investment decision.

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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.

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