📖 Your Q2 Earnings Guide: Discover the Stocks ProPicks AI Highlights to Jump Post-EarningsRead more

Riot Platforms stock slides after Kerrisdale Capital reveals short position

Published 06/05/2024, 11:03 AM
Updated 06/05/2024, 11:05 AM
© Reuters.  Riot Platforms (RIOT) stock slides after Kerrisdale Capital reveals short position

Riot Platforms (NASDAQ:RIOT) shares fell more than 5% Wednesday after Kerrisdale Capital said it is short the bitcoin miner.

The short-selling firm claimed the company "does a far better job playing energy arbitrage games and issuing stock than generating shareholder value by mining crypto."

The firm also described Bitcoin mining as "easily among the worst business models for a public company we have ever encountered."

This is based on what it says are factors including unpredictable revenue, capital intensity, the extremely competitive sector, and intense regulatory scrutiny even in crypto-friendly places like Texas, where Riot has 100% of its bitcoin production.

Kerrisdale argues that a clear sign of how the business environment for miners has soured in Texas occurred in March when Navarro County commissioners voted against a tax abatement for Riot's key growth project in Corsicana.

"With numerous low fee bitcoin ETFs and ETPs, why own shares in a company like Riot, which has seen bitcoin holdings per share and bitcoin production per share steadily decline, versus simply owning bitcoin itself," remarks the firm.

Analysts conclude: "Riot is a fundamentally poor way for investors to express a view on bitcoin and over the long-term shares have a much greater chance of being diluted into dust than outpacing gains from the new digital gold."

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.