The stock market was running behind the strong acceleration in the shares of MicroStrategy Inc. NASDAQ: MSTREspecially as it became common knowledge that the company’s bitcoin holdings would drive its valuation to new highs when and if the cryptocurrency markets went higher. However, this happiness was soon met with a new reality.
Investors began to scrutinize how MicroStrategy acquired Bitcoin, noting that it wasn’t the cleanest approach, with shareholders diluting and leveraged funds for buyouts. Although this strategy worked for a while, market efficiency eventually caught up, wiping out more than 20% of the company’s market capitalization in just one week.
Many investors feel they missed out on the microstrategy rally and are looking for opportunities to capitalize on the next potential market run. Enter CleanSpark Inc. NASDAQ: CLSKA small company adopting a microstrategy business model—designed not just to transfer wealth but to create it—offers a unique growth potential.
How CleanSpark’s business model differs from MicroStrategy’s approach
MicroStrategy is a software business that is working in Technology field. Because it doesn’t make any money, Michael Saylor, its CEO, uses the company as a vehicle to issue stock and buy bitcoins with that money.
Clean Spark today
(as of 12/4/2024 06:15 PM ET)
- 52-week range
- $6.41
▼
$24.72
- Price target
- $21.42
When working, that model can make a lot of money through leverage, as recent runs have shown, but it also poses a significant risk because it requires the use of irresponsible leverage. On the other hand, CleanSpark management makes it very clear how to set investors’ expectations.
100% of CleanSpark’s revenue Comes from the mining of Bitcoin, and considering the last 12 months; Revenues have more than doubled to demonstrate scalability and upside potential for the company’s valuations. Do they also dilute shareholders? Yes, but not to buy bitcoins, just to fund ongoing operations and mining costs, which is different than just buying bitcoins.
Realizing that this business model is no different from an oil company in the energy sector receiving a funding round to explore for new sources of oil, Coinbase Global Inc. Nasdaq: Coin CleanSpark felt confident enough in the business model to extend a new line of credit to help fund its mining operations.
Up to $50 million in credit is now available to CleanSpark’s management to continue to fund their Bitcoin mining setup. Where investor upside comes in, however, is twofold. First, the market has to wait on incoming earnings to see how much value from Bitcoin has made it to the balance sheet, where the stock can appreciate.
Then, as the cryptocurrency goes through cycles, like commodities, CleanSpark may choose to unload some of the already mined bitcoins at more expensive prices, locking in profits for investors. As margins increase, CleanSpark’s revenue and potential book value will also increase from its balance sheet.
These two tailwinds separate CleanSpark from MicroStrategy’s controversies and explain why more institutional investors and Wall Street analysts are showing confidence in CleanSpark’s future potential.
Wall Street Weighs In: What’s Next for CleanSpark Stock?
Starting with how analysts on Wall Street feel about CleanSpark stock, investors will be surprised to see significant upside expectations despite bearish price action among some of its peers.
The The consensus price target is set at $21.4 A share for now, meaning the stock could rise 59.6% from where it trades today, not the price action that can be achieved by buying Bitcoin alone. To top things off, at HC Wainwright from September 2024, they kept their Buy rating on CleanSpark stock.
Cleanspark stock forecast today
$21.42
45.89% upbuy medium
Based on 6 analyst ratings
| High forecast | $27.00 |
|---|---|
| Average forecast | $21.42 |
| Less predictable | $10.50 |
They also have a $27 per share price target on the stock, which would represent a huge upside move of up to 100%. Geode Capital Management bought these views, increasing its holdings in CleanSpark stock to 9.8% through November 2024.
This new division brought their net position to a higher level $57.6 million todayor 2.4% ownership in the company. Investors can also look at another sentiment gauge for CleanSpark: the way bearish traders are treating the name amid a microstrategy crash and bitcoin pullback from all-time highs.
Over the past month alone, short interest for CleanSpark has fallen by nearly 10%, showing signs of a decline. All told, investors need confirmation from the upcoming earnings report, where the bitcoin holdings in the company’s balance sheet will ultimately call the shots and prove or disprove the analyst’s call as opposed to today.
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