Is Riot Blockchain a Buy Opportunity Right Now?

The stock is down 51% in the last 12 months

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Riot Blockchain Inc (NASDAQ:RIOT) stock touched an annual low of $12.90 late last month, and has spent most of December slowly trying to work off its 51.9% year-over-year deficit. Now, with the security eyeing its first close above its 30-day moving average since early December, and boasting a 22% lead in February so far, could it be time to buy the dip on RIOT?

riot feb 9

The company has managed to grow its revenues by almost 1,000% since fiscal 2020 and by more than 1,500% since fiscal 2018, going from $7.8 million in fiscal 2018 to $127.6 million over the past 12 months. RIOT has also increased its net income by $28 million since fiscal 2020 and by $73.4 million since fiscal 2018, going from $58 million in net losses in fiscal 2018 to $15.4 million over the past 12 months. In addition, the stock is estimated to see a 190% increase in earnings and a 109.7% increase in revenues during fiscal 2022.

Overall, the crypto name offers a very intriguing opportunity from a risk-reward standpoint. Although, Riot Blockchain's business model comes with its fair share of risks due to the volatile nature of the cryptocurrency market, RIOT's long-term growth potential continues to be massive. The company's balance sheet also offers some security, considering that Riot Blockchain has just $8.38 million in total debt compared to $71.53 million in total cash.

Sort sellers have started jumping ship, with short interest falling 7.3% in the last reporting period, but a further unwinding of short interest could propel RIOT higher still. The 18.95 million shares sold short make up 16.9% of the stock's available float. 

Speculating on RIOT with options could be a prudent play. The equity's Schaeffer's Volatility Index (SVI) of 109% sits higher than just 13% of readings from the past year. This means options traders are pricing in relatively low volatility expectations at the moment. What's more, the stock's Schaeffer's Volatility Scorecard (SVS) stands at 80 out of 100, implying that the stock has exceeded said volatility expectations of late. 

 

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