Sign InRIOT Blockchain (RIOT) Displays Bullish Momentum, Potential for Continued Growth
Summary
As of December 18, 2023, RIOT Blockchain, Inc. displayed bullish momentum and may experience continued growth in the short term despite potential overbought conditions, with analysts recommending a Buy rating despite a target consensus price below the current stock price.
Technical Analysis
As of December 18, 2023, Riot Blockchain, Inc. (Ticker: RIOT) displayed a bullish momentum, closing at $16.40, which represented a notable jump by approximately 4.93% from the previous day. The stock demonstrated a strong upward movement with a high of $16.43, closely approaching the day's closing value, and a low of $15.17. The Relative Strength Index (RSI) sat at an elevated level of 70, signifying potential overbought conditions which often precede a pullback or stabilization of price. Additionally, the significant disparity between the 50-day moving average ($11.54) and the 200-day moving average ($11.69) compared to the last close, indicates the stock has built strong momentum over the short term.
The MACD figure (3-month) at $1.73 suggests a continuing bullish trend, while the Average True Range (ATR) of $6.41 indicates a high level of volatility in the stock’s recent performance. On the price front, the last close of RIOT appears to overcome the resistance levels, with support firmly established around $15.14. With no immediate resistance level identified, there may be potential for the stock to explore higher price ranges in the short term.
Fundamental Analysis
Riot Blockchain's market capitalization stands at approximately $3.44 billion, with a volume of trades amounting to over 43.37 million shares, nearly double its average volume of 23.84 million shares, signifying heightened investor interest. However, the company's earnings per share (EPS) is currently negative at -$1.80, contributing to its negative price-to-earnings (PE) ratio of -9.27, indicating that the company is not currently profitable.
The assessment from financial analysts reveals a consensus rating of "Buy" with six analysts recommending a purchase of the stock. This consensus is despite a target consensus price of $10.50, which lies below the current trading price, suggesting that analysts may expect the stock's price to correct in the future or they might not have adjusted their targets to account for the recent surge in RIOT's stock price.
Additionally, recent news affecting the broader blockchain and cryptocurrency sector has been positive: Bitcoin's significant rise has escalated interest in blockchain technology, and prospects for Bitcoin reaching $50,000 could further boost this sector, including companies like RIOT. The possible easing of federal interest rates in 2024 could incentivize greater investments in riskier assets such as cryptocurrencies, which might benefit RIOT's operations and financial performance.
Stock Performance Predictions
For the next trading day, considering the technical indicators and the general positive sentiment in the news, RIOT may continue to experience heightened volatility with a potential for continued growth, albeit with caution around the overbought RSI suggesting the possibility of a short-term pullback.
Considering the momentum from the past session and recent news, the upcoming week may see the stock maintaining its positive trajectory, especially if the broader market sentiment around blockchain technology remains strong. However, as the stock price is already significantly higher than both the 50-day and 200-day moving averages, investors may witness price consolidation as RIOT seeks to establish its new support levels.
Overall Evaluation
Given the strong technical indicators, positive market sentiment, and backing by analysts despite a higher current price than target consensus, RIOT would generally be categorized as a 'Buy'. Nevertheless, the overbought RSI indicates that the stock could be due for a small corrective move or sideways consolidation before further upside. Investors should proceed with caution considering the substantially high volatility and the fact that the current price substantially exceeds the analysts' target consensus.
Potential investors should also bear in mind the fundamental aspects, predominantly the negative earnings and the absence of profitability, which usually add to the risk profile of the stock. Those with a tolerance for such risk and a focus on growth rather than immediate returns may find RIOT to be a suitable addition to their portfolios, while more conservative investors might seek a clearer path to profitability before making an investment decision.
