Riot Platforms (RIOT): Evaluating Valuation After Bitcoin’s Drop Drives Recent Stock Pullback

If you’ve been following Riot Platforms (RIOT) lately, you’ve probably noticed the recent dip in its share price. The drop isn’t triggered by anything Riot did. Instead, it’s a direct reaction to Bitcoin’s slide over the past several weeks. For investors who see this move and wonder what it means for their portfolio, the key thing to know is that Riot’s fortunes remain closely linked to those of the broader cryptocurrency market rather than any major company-specific news. Looking at the bigger picture, Riot has actually put up solid numbers, with revenue growth and a positive adjusted EBITDA margin standing out even as GAAP profitability proves elusive. The stock is up nearly 58% over the past year and has surged 45% in the past three months, even after the recent pullback. This price action shows momentum building in the longer term, but it also highlights just how sensitive Riot remains to Bitcoin price swings and shifts in investor risk appetite. After a year of volatile gains and Bitcoin-driven moves, some may be asking whether Riot Platforms is currently undervalued or if the market is already factoring in all the future growth investors could hope for.

Most Popular Narrative: 24% Undervalued

According to the community narrative, RIOT is currently trading below what analysts consider its fair value. The main reasons for this assessment are the company's aggressive investment strategy and the anticipated potential from its expanding data center and Bitcoin mining operations.

The company's expansion of vertically integrated mining operations, coupled with the 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.

How much could an ambitious business blueprint be worth? There is a game-changing strategy at the center of this projection, with high expectations for significant gains in revenue and future profitability. Want to know what drives such a bold valuation? Here are the numbers and assumptions influencing analysts toward this price target.

Result: Fair Value of $17.40 (UNDERVALUED)

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

However, a significant Bitcoin price drop or delays in fully utilizing new data center capacity could quickly undermine these bullish expectations for Riot.

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

Another View: Multiples Tell a Different Story

While the community sees Riot as undervalued, the standard price-to-sales ratio draws a different conclusion. This ratio shows the shares look expensive compared to the broader US Software industry. Which method best captures Riot’s real potential?

See what the numbers say about this price — find out in our valuation breakdown.

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

If you have your own take or want to dive deeper into the numbers, creating your own narrative takes just a few minutes. So why not 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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