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Wells Fargo maintained its positive outlook on the company following its recent shift toward AI data center hosting. While the firm's $15 target is lower than the average analyst target of $29, it still sits well above the current stock price of about $7. This support from a major bank comes as the company begins to prove it can turn its massive electricity pipeline into steady rental income from AI customers. Even with the lower target, the firm still views the stock as a leader among its peers as it moves away from the more volatile business of mining Bitcoin.
Source: Wells Fargo
After Cipher Mining reported its November results, we updated our fair value and raised our quality score to 3.6. We moved our rating to Buy as we now account for the first sales from leasing data center space to high-performance computing customers. We added the development of on-site natural gas pipelines and the technical power classifications for the Texas electrical grid to what we track. We also reset our projections for the next twenty years to include the $9.1 billion in contracted revenue now secured at the Barber Lake facility.
Cipher took a major step in its pivot from Bitcoin mining to AI data centers this quarter, recording its first revenue from high-performance computing (HPC) leases. The company also extended its lease term at the Barber Lake site to 20 years with a major AI lab, which it says brings its total contracted revenue to about 9.1 billion dollars over the life of its deals.
Despite these milestones, the company brought in 30 million dollars in revenue, which was lower than the 40 million dollars analysts expected. It also reported a loss of 22 cents per share. While the company is successfully securing the massive power and long-term contracts it needs to grow, it is still spending heavily to build out these campuses. The 10 percent drop in the stock suggests that even with these new leases, the business is still being valued on future potential rather than today's earnings.
See the full quarter, and how our tracked metrics did
Source: 8-K filing
Cipher Mining is scheduled to report its quarterly results on November 2. Wall Street analysts expect the company to report a loss of about 24 cents per share on revenue of roughly 40 million dollars. The focus for this update will likely be on the company's shift from Bitcoin mining to hosting high-performance computing for AI companies. Investors will be looking for progress on its power pipeline and any new long-term leases for its data center facilities.
Cipher Mining finalized its deal to issue $850 million in convertible senior notes, which are a type of debt that can be turned into company stock later. These notes do not pay regular interest and will come due in 2032. The initial price for converting the debt into stock is set at about $15.31 per share.
This move formalizes the plan the company announced earlier this week to build up its cash reserves. Cipher is currently pivoting from mining Bitcoin to building massive data centers for AI companies, a transition that requires billions of dollars for power infrastructure and construction. While this debt provides the necessary cash to stay on schedule, it also means that if the stock price rises above $15.31, current owners could see their ownership diluted as the debt converts into new shares.
Source: 8-K filing
Management has struggled to set a reliable bar lately, with three straight misses before this quarter. The pivot from Bitcoin to AI hosting makes their forecasts much harder to trust.
| Expectation | |
|---|---|
| EPS | $-0.20 |
| Revenue | $82M |
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