Typically, cryptocurrency-related stocks aren’t the first ones that come to mind for investors looking to diversify their portfolios and align themselves with the best potential upside in the coming months. However, outperforming the market involves recognizing shifts and making adjustments that align with these changes.
One pattern that goes a long way is the changing risk perception, which is now becoming an actual ‘risk off’ policy for most investors in the market today, with Wall Street at the helm of this tide. Earlier this week, BlackRock Inc. (NYSE: BLK) released its second quarter 2024 earnings report, showing Main Street that its clients were advised to allocate into stocks, with a secondary wave being rotated into fixed-income (bonds). However, one-third of the asset class is something that investors need to watch.
After a 10% rally within the past five days, the price of Bitcoin is starting to grab the attention of many out there. Still, investing directly in Bitcoin does have its risks, as the asset is still not as regulated as stocks and bonds are. Still, there’s a way for investors to get around this caveat. By looking into stocks like CleanSpark Inc. (NASDAQ: CLSK), Coinbase Global Inc. (NASDAQ: COIN), and even MicroStrategy Inc. (NASDAQ: MSTR), investors have a new way to invest in the latest crypto cycle.
CleanSpark Receives Upgrade Ahead of Bitcoin Harvest
Within the company's investor relations website, CleanSpark management has updated investors on the current Bitcoin mining rates, which are accurate to June 2024. To this year, CleanSpark has mined up to 3,614 Bitcoin, which would translate into assets on hand of $220 million at today's Bitcoin price.
More than that, June alone reports mining of up to 445 Bitcoin, or $27 million in added assets on hand for the month alone. These mining rates are behind the company's financials, which have been stellar during the past year.
Investors should consider revenues' 163% growth rate for the past 12 months when conducting research. This massive revenue growth translated into a net income of $126.7 million, up from a net loss of $18.4 million a year prior.
This momentum led analysts at Cantor Fitzgerald to push CleanSpark stock's price target up to $28 a share, daring it to rally by 53% from where it trades today. More than that, knowing that Bitcoin could reach new highs on this new risk-on attitude, Wall Street as a whole forecasts triple-digit earnings per share (EPS) growth for the next 12 months.
One stamp of quality coming from an unlikely player is the 58.5% boost in allocation from the Vanguard Group, bringing the asset manager's net investment in CleanSpark stock to $270.5 million to own 6.4% of the entire company.
Diversification Fuels Financial Growth for Coinbase Stock
It is one thing for CleanSpark to go all in on Bitcoin, but there are other worthy cryptocurrencies in the market that investors should have exposure to if they are looking to potentially diversify their portfolios. Coinbase offers its shareholders diversification between Bitcoin and Ethereum, the largest cryptocurrencies based on market capitalization.
This is why revenues at Coinbase also broke the triple-digit rate status, going from $736 million in 2023 to $1.6 billion as of the first quarter of 2024. Rising by 116% over the year, these revenues translated into a net income of $1.1 billion for the first quarter of 2024, compared to a net loss of $78.9 million last year.
These massive turnarounds caught Wall Street’s attention, particularly for those analysts at HC Wainwright now that they see a valuation of $315 a share for Coinbase stock, calling for a rally of 29.7% from where the stock trades today. Feeling the heat of the risk-on rotation for cryptocurrency, short sellers have also decided to step away from the game.
Coinbase stock’s short interest declined by 1.1% over the past month, opening some room for the Vanguard Group to boost their positions by 18.4%, translating into a net investment of $4.5 billion today.
How Acquisitions are Propelling MicroStrategy Stock Higher
Following the same trend that CleanSpark is moving toward, MicroStrategy ensures that its Bitcoin holdings reflect its bullish view of what could come for the cryptocurrency in the coming quarters.
In the company’s first quarter 2024 earnings results, investors can find that MicroStrategy has acquired up to 25,250 Bitcoins since the end of the fourth quarter of 2023. Translating this holding into dollar terms, as of today’s Bitcoin price, it would represent assets on hand of $1.5 billion.
Because the company’s primary business is in the technology sector, particularly within the artificial intelligence services niche, it has made a recurring cash flow machine from which to fund further Bitcoin purchases in the future. How is that machine doing?
Within the press release for the past quarter, investors can see how MicroStrategy’s subscription service segment saw a 22% annual revenue jump, reaching $23 million. Because software as a service (SAAS) businesses have high margins, 77.1% in the case of MicroStrategy, the company can retain more capital at the end of the day to keep making these acquisitions.
Knowing that the company’s Bitcoin holdings could soon send the stock flying higher, Wall Street analysts have landed on a consensus price target of $2,017 as of today, which is 25.2% higher than today’s price despite a recent 15.3% rally.
