Riot Platforms, Inc. (RIOT – Free Report) has dipped 19% in the past six months against the industry’s 47% growth. This aligns with other crypto-focused stocks, such as Cipher Mining (CIFR – Free Report) , which is down 37%, and Marathon Digital (MARA – Free Report) , which has declined 54% in the past six months.
Image Source: Zacks Investment Research
With RIOT’s recent pullback, investors might see this as a buying opportunity. But is now the right time to invest in RIOT? Let’s dive in.
Trump’s Policies Should Propel Bitcoin and RIOT
Bitcoin’s value touched unprecedented levels, surpassing $100,000 for the first time. This surge is largely attributed to expectations of favorable cryptocurrency policies under the incoming Trump administration. As a Bitcoin mining company, Riot Platforms directly benefits from higher Bitcoin prices, which can lead to increased revenues and profitability.
President-elect Trump intends to integrate cryptocurrencies into mainstream financial markets, including plans to establish a national Bitcoin reserve. Such policies are expected to create a more supportive regulatory environment for cryptocurrency-related businesses, potentially reducing operational uncertainties for companies like Riot Platforms.
The post-election period has seen a rise in institutional investments in cryptocurrencies, with major financial entities like BlackRock and Fidelity launching Bitcoin-related financial products. This growing institutional interest enhances the legitimacy and stability of the cryptocurrency market, indirectly benefiting mining companies by fostering a more robust market environment.
Bitcoin Halving and Volatility Challenge RIOT
RIOT faces significant headwinds due to the Bitcoin halving event, which has doubled mining difficulty without a corresponding Bitcoin price surge. This has led to operational inefficiencies, with Riot’s Bitcoin production increasing only 1% year over year in January 2025. The halving effect puts immense pressure on ASIC miners, raising concerns about future profitability.
Additionally, RIOT exhibits a high beta of 4.23, signaling extreme volatility. This makes the stock prone to sharp price swings, posing risks for short-term investors.
Estimates Moving South
Three estimates for 2025 moved down over the past 60 days versus one upward revision.
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Over the same period, the Zacks Consensus Estimate for the bottom line for 2025 has moved from a loss of 49 cents to a loss of 64 cents. This indicates a lack of confidence among analysts in the company’s ability to improve its financial performance soon.
Image Source: Zacks Investment Research
Current Levels Don’t Present an Ideal Entry Opportunity
RIOT has encountered considerable operational and financial difficulties following the Bitcoin halving. The company’s financial outlook appears grim, with downward revisions in earnings estimates signaling the potential for continued decline. Considering the present market conditions, investors may want to proceed cautiously before purchasing RIOT shares.
Given the likelihood of further correction in RIOT’s stock, a wise strategy could be to wait and see until a more advantageous entry point emerges.
RIOT currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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