This edition of Stock Spotlight features Riot Platforms (RIOT), a Bitcoin-mining company that's already gained +46% since Hedgeye's Digital Assets Pro team added the stock to their Position Monitor as a Best Idea Long on August 19, 2024.
RIOT still offers plenty of growth potential—while carrying significant risks.
Fundamentals: A Bitcoin Mining Powerhouse
Riot Platforms aims to become the world’s leading Bitcoin-driven infrastructure platform. Digital Assets Analyst Josh Steiner sees Riot adopting a MicroStrategy-like approach, using equity issuance to expand operations and acquire Bitcoin (BTC), benefiting from its price appreciation.
In other words, the stock has been riding the Bitcoin wave—appreciating from $8.05 when Hedgeye elevated it to a Best Idea Long in August to $11.78 at the close on February 5, 2025.
Good News for RIOT: BTC has a Bullish Trend (3+ months) signal on the February 5, 2025 edition of Hedgeye's Bitcoin Trend Tracker.
On the flip side, RIOT will face significant risk if Bitcoin crashes.
quantitative Signal: neutral
Hedgeye CEO Keith McCullough’s quantitative signal was Bullish on RIOT from November 1, 2024 through January 31, 2025. The stock gained +26% during that period. Keith's signal has turned neutral on RIOT, an important consideration for investors, especially in the immediate-term.
Macro risk: A Shifting Environment
Hedgeye’s Macro Nowcast currently maps the U.S. economy in Quad 4 for February 2025. That is when both economic growth and inflation slow, historically a risky environment for high-risk assets.
However, our Macro team forecasts a shift into Quad 2—when both growth and inflation accelerate—in March and April 2025. Quad 2 often provides favorable tailwinds for the digital assets sector.
The Bottom Line:
Riot Platforms (RIOT) has delivered strong gains since Hedgeye’s Digital Assets Pro made their Best Idea Long call in August 2024.
The company continues to expand its Bitcoin-mining operations, leveraging equity issuance to acquire more BTC. While Bitcoin’s Bullish Trend signal is a positive tailwind, RIOT faces downside risk if BTC weakens.
Hedgeye’s quantitative signal on RIOT has shifted to neutral, signaling caution in the immediate term. Meanwhile, the Macro backdrop is shifting—Quad 4 risks persist in February, but a potential move into Quad 2 by March could provide renewed strength for stocks in this volatile sector.
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