Riot Blockchain Inc (NASDAQ:RIOT) continues to send shockwaves on Wall Street having emerged as an exciting investment opportunity for people looking to gain exposure and generate substantial returns in the cryptocurrency business.
The blockchain focused company’s stock has been the subject of increased volatility in recent trading sessions.
While the stock has achieved a new milestone on rising to highs of $24 a share, it has also come under pressure seen by a recent pullback to the $15 mark.
Before we look at what might have caused the unexpected price swings let’s see what the company does.
Formerly Bioptix, Riot Blockchain has switched its attention to blockchain technologies in pursuit of growth opportunities. The company is planning to gain exposure to the blockchain ecosystem by targeting investments around bitcoin and Ethereum.
Riot Blockchain new focus is to invest in companies that utilize blockchain technology or engage in the cryptocurrency business.
Riot Blockchain Groundbreaking investments
After operating as a biotech company for years, Riot Blockchain quit the sector and invested $3 million for a 12% stake in Coinsquare, one of Canada’s largest cryptocurrency exchanges. The company has also acquired a 52% stake in Tess, a Canadian company currently working on blockchain based payment service.
Riot has also taken a stake in Verady, an Atlanta based company that has launched a decentralized network targeting the cryptocurrency community. Verady is preparing for an initial token offering and the introduction of Ethereum auditing services early next year.
In addition to making bold investments, Riot has launched its own bitcoin mining operation. The company has bought 1,200 Bitcoin mining machines as it looks to generate significant returns from the business of mining bitcoin.
“This investment continues our commitment to building blockchain technologies. With recent highs in Bitcoin and other cryptocurrency valuations, there is significant market potential for blockchain and digital asset technologies. We will continue to increase our involvement and support of the blockchain ecosystem, as we ramp up our Bitcoin mining operations,” said CEO John O’Rourke.
Riot Blockchain Stock Performance
The investments have helped strengthen investors’ confidence in the stock seen by its performance over the past few weeks. With Bitcoin and Ethereum touching record highs, Riot Blockchain has also started to reap rewards of its increased focus on the two cryptocurrencies.
The solid performance follows claims the company has what it takes to have a disruptive effect on future transactions online. The company is also positioning itself to be a fast mover on the NASDAQ focused on blockchain technology.
Over the past one month, Riot Blockchain share price has gained more than 100% of market value. The shares are up by more than 300% since September and at some point were up by more than 400%. Bitcoin and Ethereum have also rallied by almost similar margins as investor interest on cryptocurrencies continues to grow.
Riot trades with a market capitalization of about $74.4 million. It also boasts of a solid balance sheet that continues to strengthen investor confidence in its long prospects. The Company currently has $13.14 million of cash on the books with liabilities of about $215,712.
The company leverage free cash flow for the past 12-months stands at -$1.66. Analysts are expecting $0 in earnings per share this quarter.
Riot Blockchain Stock Catalyst
Investors switching their attention to cryptocurrencies is seen as a major catalyst that may continue to push Riot Blockchain up the charts. For long, many investors have been on the fence on whether to venture into the cryptocurrency sector. That is not the case anymore.
Sentiments are slowly changing in favor of cryptocurrencies as institutional investors take note of the fact that they could be here for the long haul. Investors are increasingly looking for ways to gain exposure on cryptocurrencies as bitcoin continues to hit record highs.
Riot with its massive investments in various sectors around cryptocurrencies appears to have caught the attention of many investors. The stock is thus expected to continue powering high as cryptocurrencies threaten to replace fiat currencies when it comes to facilitating transactions online.
Riot Blockchain shares have also received support from a number of large banks, which have completed a six-month test on the benefits of the blockchain technology. A test of the $2.8 trillion equity swaps market proved once again that blockchain technology can be relied upon. According to JPMorgan Chase & Co. (NYSE:JPM) Citigroup Inc. (NYSE:C) and Goldman Sachs Group Inc. (NYSE:GS), the test showed 100% success rate and demonstrated the ability of the technology to lower costs significantly.
Amidst the bold investments and big bets, Riot could face questions relating to its long-term prospects. The sale of the company’s Bioptix assets generated significant cash. However, investors will continue to question whether investments made are capable to generate significant revenue in the short term, to bolster cash flow levels. For now, as long as the euphoria continues around anything to do with blockchain, expect investor interest to remain strong on RIOT.
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Disclosure: We have no position in RIOT and have not been compensated for this article.