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CleanSpark Inc

Recommendation: Buy

Entry Date Symbol Recommendation Entry Price (USD) Target 1 (USD) Target 2 (USD) Holding Duration Potential Upside
17 Jun, 24 CLSK Buy USD 17.08 USD 18.9 USD 20.5 1 day 20.0%

Fundamentals

  • Previous Close 11.14
  • Market Cap4106.22M
  • Volume4420544
  • P/E Ratio138.62
  • Dividend Yield-%
  • EBITDA223.90M
  • Revenue TTM283.63M
  • Revenue Per Share TTM1.74
  • Gross Profit TTM 90.29M
  • Diluted EPS TTM0.13

Data Powered by EOD Historical Data (“EODHD”).

Company Overview

CleanSpark, Inc. operates as a bitcoin miner in the Americas. It owns and operates data centers that primarily run on low-carbon power. Its infrastructure supports Bitcoin, a digital commodity and a tool for financial independence and inclusion. The company was formerly known as Stratean Inc. and changed its name to CleanSpark, Inc. in November 2016. CleanSpark, Inc. was incorporated in 1987 and is headquartered in Henderson, Nevada.

Key Positives

Revenue Growth: Expansion of Revenue to USD 111.8 mn in Q1FY24 from USD 42.5 mn in Q1FY23. 

Higher Liquidity: The Current Ratio of 12.50x in Q1FY24 vs. 0.80x in Q1FY23. 

Key Negatives

Lower Margins: Operating at 69.3% gross margins in Q1FY24 vs. Industry Median of 78.7% 

Operational Inefficiency: Asset Turnover stands at 0.09x in Q1FY24 vs. Industry Median of 0.13x.   

Key Investment Risks

Bitcoin Price Volatility, Market cycles, Technological, Security Issues, etc. 

Recommendation Summary

Technical Summary

Entry Price Support* Target 1 Target 2
17.08 15.6 18.9 20.5

Data Source: REFINITIV, Analysis: StockNextt

*Support can be considered as an indicative stop-loss, and if prices move below that level on closing basis individuals may evaluate exiting the position depending on their risk appetite, previous holdings, and other factors considered. The support and resistance levels may need to be re-evaluated within 4-6 weeks’ time frame depending on the stock price movements from the date of recommendation on the stock.

Key Reasons for Buy

 

  • Operational Achievements and Strategic Expansion: CLSK reported healthy operational achievements and strategic expansion during the recent quarter. The company increased its operational capacity by more than 60% and expanded its facilities into new locations in Mississippi and Georgia. These efforts have elevated CLSK's total operational capacity to over 17 EH/s, marking a milestone in the company's growth trajectory. The expansion initiatives have directly contributed to a notable surge in revenue, underscoring the efficacy of CLSK's strategic initiatives and targeted growth strategies.  
  • Financial Performance: The company achieved record-breaking revenues of approximately USD 112 million during this period, reflecting a substantial increase compared to USD 42.5 million in the corresponding period last year. This growth in revenue was supported by improved margins driven by higher bitcoin prices and expanded operational efficiencies. Operating costs at CLSK's wholly owned sites remained competitive, with wholesale power costs as low as 1.3 cents per kilowatt-hour and an advantageous all-in power cost of 4.3 cents per kilowatt-hour. As of March 31, 2024, CLSK maintains a robust financial position with nearly USD 700 million in combined cash and bitcoin holdings, alongside negligible debt. This financial strength positions the company favorably for future growth opportunities, including strategic investments and expansions.
  • Q2 Financial Highlights: CLSK's second-quarter financial results for the three months ended March 31, 2024, underscore its strong performance and financial resilience. The company reported quarterly revenues of USD 111.8 million, marking an increase of USD 69.3 million or 163% from USD 42.5 million in the same period the prior year. Net income for the quarter totaled USD 126.7 million, equating to USD 0.59 basic income per share, a significant turnaround from a loss of USD (18.5) million or USD (0.23) loss per share in the corresponding period last year. Adjusted EBITDA also saw substantial growth, rising to USD 181.8 million compared to USD 12.7 million in the same period last year. These financial metrics highlight CLSK's effective management of operations and strategic initiatives, driving robust profitability and shareholder value creation. 
  •  Balance Sheet Highlights: As of March 31, 2024, CLSK's balance sheet reflects a solid financial foundation and prudent capital management. The company reported total assets amounting to USD 1.54 billion, with significant components including USD 323.1 million in cash and USD 358.0 million in bitcoin holdings. Total current assets stood at USD 687.8 million, supported by mining assets totaling USD 623.1 million, inclusive of prepaid deposits and deployed miners. CLSK's liabilities remained manageable, with current liabilities amounting to USD 55.0 million and total liabilities at USD 74.4 million. The company's strong stockholders' equity of USD 1,462.9 million further underscores its financial stability and capacity to support future growth initiatives. With a working capital of USD 632.7 million and minimal debt of USD 12.8 million, CLSK is well-positioned to capitalize on market opportunities and navigate potential challenges effectively.

Technical Observation (on the daily chart): 

The Relative Strength Index (RSI) over a 14-day period stands at a value of 51.80, currently consolidating, with expectations of a consolidation or an upward momentum. Additionally, the stock's current positioning is above both the 21-period SMA and 50-period EMA, which may serve as dynamic short to medium-term support levels. 

As per the above-mentioned price action, recent key business and financial updates, momentum in the stock over the last month, and technical indicators analysis, a ‘Buy’ rating has been given to CleanSpark, Inc. (NASDAQ: CLSK) at the current market price of USD 17.08 as of June 17, 2024, at 07:15 am PDT.

Key Financials in Pictures

Income Statement

Balance Sheet

Change in Cash

Total Operating Cash

Dividends Paid

Data Powered by EOD Historical Data (“EODHD”).

Peer Comparison

Sector: Financial Services Industry: Capital Markets

Company Change (USD) Price (USD) Trailing PE (x) Forward PE (x) Price Sales TTM (x) Price to Book Value (x) Enterprise Value to Revenue (x) Enterprise Value to EBITDA (x)
CLSK
CleanSpark Inc		 -0.5492 4.93% 10.59 138.62 21.37 15.62 4.12 14.71 52.71
MS
Morgan Stanley		 -0.225 0.18% 123.22 16.50 13.76 2.80 1.65
SCHW
Charles Schwab Corp		 -0.315 0.42% 74.00 22.86 17.39 6.14 4.28
GS
Goldman Sachs Group Inc		 -2.2467 0.40% 563.85 18.44 10.60 2.83 1.16
CIIHY
CITIC Securities Co Ltd ADR		 - -% 30.18 15.86 7.89 0.98 1.07 10.27

Data Powered by EOD Historical Data (“EODHD”).

Disclosures:

Individuals can evaluate the stock based on the support and resistance levels provided in the report in case of keen interest taking into consideration the risk-reward scenario. 

 

Markets are trading in a highly volatile zone currently due to certain macro-economic issues and prevailing geopolitical tensions. Therefore, it is prudent to follow a cautious approach while investing. 

Related Risk: This report may be looked at from a high-risk perspective and a recommendation is provided for a short duration. This report is solely based on technical parameters, and the fundamental performance of the stocks has not been considered in the decision-making process. Other factors which could impact the stock prices include market risks, regulatory risks, interest rates risks, currency risks, social and political instability risks etc. 

 

Note 1: Past performance is not a reliable indicator of future performance.  

Note 2: The reference date for all price data, currency, technical indicators, support, and resistance level is June 17, 2024. The reference data in this report has been partly sourced from REFINITIV. 

Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above. 

Note 4: Target Price refers to a price level that the stock is expected to reach as per the relative valuation method and or technical analysis taking into consideration both short-term and long-term scenarios. 

Note 5: ‘Kalkine reports are prepared based on the stock prices captured either from the New York Stock Exchange (NYSE), NASDAQ Capital Markets (NASDAQ), and or REFINITIV. Typically, all sources (NYSE, NASDAQ, or REFINITIV) may reflect stock prices with a delay which could be a lag of 15-20 minutes. There can be no assurance that future results or events will be consistent with the information provided in the report. The information is subject to change without any prior notice.

 

 

 

 

 

Technical Indicators Defined: -

Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest. Support 1 refers to the nearby support level for the stock and if the price breaches the level, then Support 2 may act as the crucial support level for the stock.
Target: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest. Target 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Target 2 may act as the crucial resistance level for the stock.
Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.

Disclaimer :
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