Bitfarms shares maintain Buy rating after Riot settlement By Investing.com

Bitfarms Ltd. (NASDAQ:BITF) maintained its Buy rating and a $4.00 price target from H.C. Wainwright. The affirmation follows the recent settlement agreement between Bitfarms and Riot Platforms (NASDAQ:), which concludes Riot’s previous hostile takeover efforts.

The conflict began in April when Bitfarms’ board rejected Riot’s unsolicited $950 million acquisition bid. Since then, Riot had purchased a 19.9% stake in Bitfarms by acquiring 90.1 million shares and had pushed for a special shareholder meeting intended to restructure Bitfarms’ board.

The settlement agreement has averted what could have been a prolonged and expensive proxy fight. With this resolution, Bitfarms’ management can now focus on the company’s growth strategy and aim to achieve its 21 EH/s guidance by the end of 2024.

The news was well received in the market, with Bitfarms’ stock trading 1.7% higher and Riot’s stock up by 1.3%, against a modest 0.30% gain in the Nasdaq overall.

H.C. Wainwright’s commentary highlighted the positive implications of the settlement for both Bitfarms and Riot Platforms. The agreement allows both companies to avoid the costs and distractions of a proxy battle. The firm also noted that Bitfarms’ shares are trading at a roughly 40% discount to peers based on 2024 estimated revenues, a valuation gap seen as unwarranted.

The settlement marks the end of a contentious period for Bitfarms, during which its operations were under the shadow of a potential takeover. With the agreement in place, the company is poised to proceed with its operational plans without the overhang of corporate uncertainty.

Both Bitfarms and Riot Platforms’ stocks have seen an uptick following the announcement, indicating a market consensus that the resolution is a positive development for the companies involved.

Bitfarms has announced an accelerated deployment of miners at a Pennsylvania site operated by Stronghold Digital Mining Hosting, LLC. The new mining hardware is expected to contribute an additional 2.2 exahash per second (EH/s) to Bitfarms’ capacity in October 2024. Furthermore, Bitfarms reported a decrease in its Q2 2024 revenue to $42 million and a net loss of $27 million.

Riot Platforms has increased its stake in Bitfarms to 18.9%, acquiring an additional one million common shares. This move comes amidst a backdrop of ongoing tensions between the two companies, following Riot’s withdrawn unsolicited offer to acquire Bitfarms for $950 million. Riot Platforms has also been advocating for changes in Bitfarms’ Board of Directors, citing governance issues.

InvestingPro Insights

In light of the recent settlement between Bitfarms Ltd. and Riot Platforms, it’s pertinent to consider the financial health and market performance of Bitfarms as it moves forward with its growth strategy. According to InvestingPro data, Bitfarms holds a market capitalization of $912.43 million, with a notable revenue growth of 37.27% in the last twelve months as of Q2 2024. This indicator aligns with the company’s focus on expansion and the positive market reception of its resolution with Riot Platforms.

InvestingPro Tips suggest that Bitfarms’ stock price movements are quite volatile, which could be of interest to investors looking for dynamic market plays. Additionally, analysts anticipate sales growth in the current year, supporting the optimistic view from H.C. Wainwright regarding the company’s potential. On the flip side, analysts do not anticipate the company will be profitable this year, and the company has been quickly burning through cash, which could raise concerns about its short-term financial sustainability. For those seeking a deeper analysis, InvestingPro provides further tips, with 13 additional insights available for Bitfarms on their platform.

While Bitfarms does not pay a dividend, suggesting a reinvestment of earnings into growth, the company’s price is currently at 51.79% of its 52-week high, indicating some potential room for recovery. The InvestingPro Fair Value estimate of $2.87 suggests a more conservative outlook than the analyst target, highlighting the importance of thorough research when considering investment decisions in this volatile sector.

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