An Analysis of Riot Platforms’ Current Market Pricing

Riot Platforms Inc. (NASDAQ: RIOT) is a Bitcoin mining company that is vertically integrated. Its primary revenue earner is its mining activities, though the business also engages in data center engineering and hosting. At the moment, the company’s shares are priced at $10.9 each, and many investors may be wondering whether this pricing is appropriate and whether they can get value if they add this stock to their portfolios. We explore this subject so that intending investors can make an informed decision.

With its market cap currently standing at $3.2 billion, Riot Platforms has a $10.3 GF value. Many factors go into determining the GF value, and this metric suggests that the company’s current share price is fair. What investors can read from this is that there’s potential stability when one is thinking long-term, assuming the business is to retain its current rate of growth.

Another interesting statistic is that Riot Platforms outpaces nearly 80% of similar companies with its 29.12 cash-to-debt ratio. At such a ratio, savvy investors note that such a company has a diminished risk of losing its capital. This is a reassurance for those looking to get in.

However, a look at the entity’s operating margin reveals that there are some challenges with regard to profitability. The operating margin is currently -86.83%. Concerns about operating margin issues are, however, diminished when one considers that during the previous three fiscal years, the company reveals impressive growth-rate figures. Riot Platforms’ 77.3% revenue growth rate average trumps averages within the industry, which strengthens the potential of this company to create value for its shareholders.

As an investor, you may want know what investment returns a company you are interested in can potentially provide. This is where the rubber hits the road. For Riot Platforms, its 26.12 weighted average cost of capital (WACC) is higher than its -21.6 return on invested capital (ROIC). This disparity hints at the current economic environment presenting challenges for the company to be efficient in its efforts to deliver shareholder value by way of getting returns on the capital that has been invested in its stock.

In summary, the company’s current fair pricing, the robust financial position and the high potential for growth make a strong case for a potential investor to dive in and add the stock of this company to their holdings. The profitability concerns explored above present a situation where each investor has to assess their risk appetite and decide whether they can go ahead and put money into Riot Platforms or hold on as they study the company’s profitability a while longer.

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