DA Davidson Cuts Miner Stronghold’s Target by 40% Ahead of Earnings

Bitcoin (BTC) miner Stronghold Digital’s (SDIG) price target was slashed 40% to $25 on slower-than expected operational progress to date and supply chain challenges across the sector, investment banking firm DA Davidson said in a note.

• “Previously, our model [for Stronghold] was heavily based on projections around the IPO but with the slower-than expected progress to date and supply chain challenges across the sector, we think it makes sense to be more conservative,” DA Davidson analyst Chris Brendler wrote in the note, published on Tuesday.
• DA Davidson expects the miner to achieve a hashrate of 6.4 exahash per second (EH/s) for 2022 and 12.6 EH/s from 2023, down from previous estimates of 7.4 EH/s and 14.4 EH/s. The Wall Street bank also lowered the miner’s revenue and earnings before interest, taxes, depreciation (EBITDA) estimates for both years.
• However, Brendler thinks the stock is still “super cheap” as Stronghold’s waste coal-powered mining operation will have a cost advantage over other miners, who will see higher power costs due to rising energy prices.
• Stronghold’s stock is rated buy and the miner is set to report its fourth-quarter earnings on Tuesday post market.
• The shares of the miner have fallen about 66% since it started trading on Oct. 20, while bitcoin fell 22% in the same period. The stock fell about 2% during early trading, while most peers were flat.