On Friday, B.Riley set a new stock price target for Bitfarms Ltd. (NASDAQ: BITF), raising it to $4.00 from the previous $3.00, while reiterating a Buy rating on the stock. This adjustment follows Bitfarms' third-quarter earnings call, where the company reported an adjusted EBITDA of $6.4 million, which fell short of the analyst's $9.5 million projection.
The lower earnings were largely attributed to unexpected increases in SG&A expenses, which totaled $28 million compared to the anticipated $12 million. These expenses included one-time costs related to the RIOT requisition, settlements with the former CEO, and costs associated with acquisitions.
Bitfarms experienced a growth in its operational hash rate, which is a measure of the computing power used to mine cryptocurrencies. The rate increased by 14% from 10.4 EH/s to 11.9 EH/s during the quarter.
However, the company did not meet its mid-year target of 12 EH/s due to delays caused by warranty services for its mining equipment. Consequently, Bitfarms has pushed back its year-end target of reaching a hash rate of 21 EH/s from 2024 to the first half of 2025.
The company is actively exploring opportunities to expand into AI and high-performance computing (HPC) infrastructure. Bitfarms plans to start with a 1-2 MW pilot project to evaluate the potential of this venture before committing to a larger-scale operation. The prospective pilot sites, located in Washington or Pennsylvania, offer strategic advantages including proximity to major cities, access to cost-efficient power, and available land for rapid development.
In the broader scope of its growth strategy, Bitfarms is in the process of acquiring Stronghold through a merger agreement, with the transaction expected to be finalized in the first quarter of 2025. A shareholder meeting regarding this acquisition is scheduled for November 20.
In light of these developments, B.Riley has updated its estimates for Bitfarms' fourth-quarter and full-year 2024 adjusted EBITDA, raising them from $21.8 million to $30.2 million, and from $63.6 million to $69.2 million, respectively. The firm's optimism for Bitfarms is partly driven by the recent uptick in Bitcoin prices, which has positively influenced the price target adjustment.
In other recent news, Bitfarms Ltd. reported key strategic developments and operational results in its third quarter 2024 earnings call. Despite strong results including a 14% increase in Bitcoin earned and an 8% rise in revenue, the company faced a net loss of $37 million due to one-time costs and increased expenses. Bitfarms also announced a significant merger with Stronghold Digital Mining and operational upgrades, including a fleet upgrade that increased hashrate by 83%.
However, the company experienced delays in reaching its hashrate targets due to construction and shipping challenges and postponed its year-end 2024 hash rate goal of 21 EH/s to the first half of 2025. H.C. Wainwright analysts maintained a Buy rating on Bitfarms shares, despite these setbacks, believing that Bitfarms should exceed its initial 35 EH/s target by 2025.
Bitfarms is diversifying its strategic focus into high-performance computing and artificial intelligence, while also expanding its operations in the United States. These are recent developments shaping Bitfarms' strategic direction and operational performance.
InvestingPro Insights
Recent InvestingPro data provides additional context to Bitfarms' financial situation and market performance. As of the last twelve months ending Q3 2024, Bitfarms reported revenue of $182.96 million, representing a significant growth of 43.88% year-over-year. This aligns with the company's expanding operational hash rate and the overall growth strategy discussed in the article.
Despite the revenue growth, Bitfarms faces profitability challenges. The company's gross profit margin stands at -17.48%, and it reported an operating income of -$95.59 million for the same period. These figures reflect the operational hurdles and increased expenses mentioned in the earnings call, including the unexpected rise in SG&A costs.
InvestingPro Tips highlight that Bitfarms holds more cash than debt on its balance sheet, which could provide financial flexibility as the company pursues its expansion plans into AI and high-performance computing. Additionally, analysts anticipate sales growth in the current year, supporting the positive outlook presented by B.Riley's increased price target.
For investors seeking a more comprehensive analysis, InvestingPro offers 12 additional tips for Bitfarms, providing a deeper understanding of the company's financial health and market position.
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