Sign InRiot Blockchain: Bullish Signals for Potential Upside Despite Cryptocurrency Market Pressures
Summary
Riot Blockchain, Inc. (RIOT) is facing pressure from fluctuations in the cryptocurrency market but its positive fundamentals, potential undervaluation, and oversold technical indicators suggest a possible upward price adjustment in the near term, with a price range of $12.03 to $13.35 expected for the next trading day and a gradual increase to reach or surpass the 50-day moving average at around $14 over the next week.
Company Overview
Riot Blockchain, Inc. (NASDQ: RIOT) is a prominent player in the digital assets industry, focusing on Bitcoin mining. The company has been recognized for its low-cost operations, continual expansion, and increasing production. However, it has recently faced pressure from fluctuations in the cryptocurrency market primarily due to external factors like Elon Musk selling his Bitcoin holdings.
Fundamental Analysis
Riot's EPS (Earnings Per Share) stands at -$1.6 and the P/E (Price To Earnings) ratio at -7.69, implying the company is currently not profitable. Its market capitalization is $2.28 billion. Outstanding shares total 185.31 million.
The company's discounted cash flow (DCF) stands at $13.95, which is higher than the last close price of $12.3. This indicates a potential undervaluation of the stock, offering a possible buying opportunity for investors looking for value. The consensus among analysts is a "Buy", with four recommending a buy and none suggesting sell or hold. The consensus target price is $10.5, ranging from a low of $9 to a high of $12.
Significant news includes plans for exponential growth and expanding mining capabilities, suggesting an optimistic future outlook. However, this positive outlook is tempered by the recent industry-wide impact of Elon Musk's liquidation of his Bitcoin holdings.
Technical Analysis
The daily trading volume on August 29, 2023, was 41.49 million shares, which is above the average volume of 22.36 million shares. This increased interest could be an early indication of a potential trend reversal or continuation. The stock saw a significant increase of 17.25% to close at $12.3, after trading between $10.35 and $12.55 during the day. The high trading volume combined with a significant price increase could indicate strong market conviction for this movement.
The Relative Strength Index (RSI14) stands at 29, suggesting the stock is currently near oversold levels. This could present an interesting buying opportunity if the stock reverses this trend. The ATR (Average True Range) of the stock is 9.03 which is relatively high, indicating high volatility.
The stock is currently trading below its 50-day moving average of $14.82 but above its 200-day moving average of $9.39, which indicates a generally bearish mid-term trend but a bullish long-term trend. The MACD (Moving Average Convergence/Divergence), a trend-following momentum indicator, is -2.43, also implying a bearish momentum for the stock.
Support and Resistance
The stock has immediate support at $12.03 while the immediate resistance is at $13.35. If the stock breaks above this resistance, it could see additional upward momentum.
Expectations and Recommendation
Given Riot's current fundamentals, particularly analysts' consensus to buy and its potential undervaluation indicated by the DCF, along with technical indicators suggesting it might be oversold, there's a possibility of an upward price adjustment in the upcoming trading day and week. However, investors should be aware of the company's negative earnings and profitability metrics.
As for the price prediction for the next trading day, August 30, 2023, considering the broad range of volatility (ATR), the support and resistance levels, and the currently bullish sentiment, the stock is likely to trade within a range of $12.03 and $13.35.
Over the next week, assuming consistent market conditions and considering the company's positive news of growth and expansion, Riot's stock could gradually reach or surpass the current 50-day moving average, targeting a price level around $14.
Considering all these factors, the evaluation for Riot Blockchain, Inc. (RIOT) stock is a moderate "Buy". This is tied to the upside potential it presents due to its discounted price, promising growth plans, and the current technical indications of being oversold. However, investors should maintain caution due to its lack of profitability and high exposure to the volatile cryptocurrency market.
