As a seasoned analyst with years of experience in the cryptocurrency market, I find this settlement between Bitfarms and Riot Platforms to be a significant development that could potentially reap benefits for both parties.
According to H.C. Wainwright analysts, the growth of Bitfarms’ stock appears imminent after the resolution of the hostile takeover attempt by Riot Platforms, which had been ongoing for six months.
Previously, on September 23rd, Bitfarms and Riot Platforms came to a mutual understanding to terminate Riot’s attempt at acquiring the Canadian Bitcoin (BTC) mining company.
Based on the assessment of H.C. Wainwright analysts, it’s projected that shares of Bitfarms could reach $4 each. The analysts have retained their “Buy” recommendation for Bitfarms, considering the company’s shares as currently underpriced, as suggested in a note circulated to crypto.news.
As I pen this down, I find myself observing that Bitfarms’ stock (NASDAQ: BITF) is currently being traded at around $2.06 per share. Interestingly, according to revenue projections for 2024, Bitfarms appears to be trading at a nearly 40% lower price compared to other Bitcoin mining companies, a discrepancy that analysts have pointed out.
Details of the Bitfarms deal
This agreement signifies the end of Riot’s endeavor, which commenced back in April when they proposed purchasing Bitfarms for $950 million. However, this offer was deemed unfairly low by Bitfarms’ management.
After being turned down, Riot gained 19.9% of Bitfarms’ existing shares and aimed to alter the board composition via a special shareholders’ gathering. This action is now withdrawn as part of the agreement reached during settlement negotiations.
According to the terms of the agreement, Bitfarms is set to increase its board membership to six people and nominate an outside director for approval. In return, Riot Blockchain has agreed to endorse all the proposed actions. Additionally, Riot Blockchain will be given the opportunity to purchase additional shares from Bitfarms, subject to owning at least 15% of the outstanding shares.
Analyst’s thoughts
Based on expert analysis, this deal represents a substantial success for Bitfarms, as it eliminates a significant concern affecting the company’s stocks.
Analysts have pointed out that with current developments, Bitfarms is now able to concentrate on its growth strategy for 2024, with an objective of reaching 21 exahashes per second by the end of the coming year. They consider this move as a pivotal action for Bitfarms to rebuild trust among investors and carry out its expansion plans uninterrupted.
Analysts also think that this agreement is advantageous for Riot Games, since it spares them from the possibility of an expensive and time-consuming proxy fight against Bitfarms.
The analysts have set a $4 forecast, built upon a 6.5-fold enterprise value-to-revenue ratio for the year 2024 – a valuation similar to other mining companies dealing with Bitcoin. Yet, they issue a word of warning about potential hazards like fluctuations in Bitcoin’s price, delays during construction, and possible dilution of shares.
Following the recent settlement, I witnessed a 1.7% surge in my Bitfarms stock holdings, while my Riot Blockchain shares also saw a 1.3% increase. This upward trend suggests a favorable market response to the resolution of the issue at hand.
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2024-09-23 22:21