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RIOT Stock – Awaiting A Major Catalyst

RIOT Stock

The Bitcoin mining leader Riot Platforms, Inc. (NASDAQ: RIOT), is, to no one’s surprise, deeply tied to Bitcoin prices, which have seen a 65% increase YTD. With the government forecast to run out of money as early as June 1, talks about a debt ceiling deal to be finalized by next week started arising. The general sentiment at the moment is that a deal will be made before June after positive talks between President Joe Biden and House Speaker Kevin McCarthy. That would pave the way for Bitcoin’s value to increase as it is a risky asset, and risky assets’ value is deeply tied to macro stability, which in turn will see the RIOT stock price increase.

RIOT Stock News

As of right now, the US is navigating the uncertainty of the debt ceiling as the deadline gets closer and closer and the risk of defaulting increases. Defaulting would be catastrophic, not only for Bitcoin and RIOT but for the whole stock market and the US economy. The US government probably will not resort to defaulting because of the risks it poses for its economy. 

A deal was put forward to suspend the debt limit by $1.5 trillion or until March 31, 2024, in exchange for other demands like a spending cut for the next 10 years, it is expected that a deal will be reached before June regardless. This sentiment was made stronger after President Joe Biden and House Speaker Kevin McCarthy gathered Monday evening for one-on-one negotiations and offered strikingly optimistic takes on where things stand.

If a debt ceiling deal were to be made, that would mean that the US has reached macro stability. In that case, the stock and cryptocurrency markets would see more of a bull market, which is all good news for RIOT. As a leader in Bitcoin mining, if Bitcoin saw an increase in value it is expected that RIOT stock would also increase alongside it. Bitcoin was already doing well this year in what a lot called a bear market, so it is expected to rise even more in case a deal has been reached.

RIOT stock saw a 10% increase earlier this week and a 249% increase YTD despite RIOT recording disappointing Q1 2023 results. There is also a chance of a short squeeze happening as RIOT stock has a short interest rate of 15.92% and 34.85% of its free float on loan, while also having a 100% utilization rate. This can result in the RIOT stock price soaring as the short sellers are forced to cover their short positions.

RIOT stock short data

In Q1 2023, RIOT Produced 2,115 Bitcoin as compared to 1,405 Bitcoin during the same three-month period in 2022 and currently holds 7,094 Bitcoin which amounts to $202 million at the current Bitcoin trading price. RIOT is currently building a 1-gigawatt developed capacity facility in Texas to expand its Bitcoin mining and data center hosting capabilities. In that case, RIOT would increase its Bitcoin production by a huge margin once the facility becomes online. That would mark RIOT increasing its revenue exponentially especially if Bitcoin rallies after the debt ceiling deal.

RIOT Stock Financials

In its Q1 2023 report, RIOT’s assets decreased 5% YoY from $1.319 billion to $1.250 billion, and its cash and cash equivalents decreased 31% YoY from $230 million to $158 million. RIOT’s total liabilities saw a slight increase of 6% YoY from $168 billion to $158 billion. 

Revenue also increased 8% YoY from $79 million to $73 million. Operating costs increased almost 225% from $40 million to $130 million, which contributed to operating loss increasing nearly 240% YoY from $39 million in operating income to $56 million in operating losses, which amounted to a net loss of $55 million – a 250% increase YoY.

Media Sentiment

@SimpleSwings is bullish on RIOT’s short squeeze potential.

@JaviCharts is bullish RIOT could break out soon.

Technical Analysis

RIOT stock chart

RIOT stock’s trend is neutral with the stock trading in a sideways channel between $10.3 and $12. Looking at the indicators, the stock is trading above the 21, 50, and 200 MAs which are bullish indications. However, the RSI is overbought at 71 and the MACD is bullish.

RIOT stock chart

As for the fundamentals, RIOT’s main catalyst is the expected Bitcoin rally if a debt ceiling deal is reached. Despite the RSI being oversold, RIOT stock could continue performing well due to the positive expectations of reaching a debt ceiling deal.

RIOT Stock Forecast

Bitcoin and in turn RIOT stock have increased 65% and 249% respectively YTD. If a debt ceiling deal were to be made and the U.S. reached macro stability both assets are expected to run. The next few days are important for RIOT stock as the talks continue to reach agreeable terms between both parties.

If you have questions about RIOT stock and where it could be heading next feel free to reach out to us in our free alerts room!


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