Hut 8 Corp. Stock Before Q4 Earnings: Smart Buy or Risky Move?

Hut 8 Corp. HUT is scheduled to report fourth-quarter 2024  results on March 3, 2025.Find the latest EPS estimates and surprises on Zacks Earnings Calendar.The Zacks Consensus Estimate for fourth-quarter sales is pegged at $34.85 million.The consensus mark for fourth-quarter loss remains unchanged at 18 cents per share in the past 30 days.Let’s see how things have shaped up prior to this announcement.Hut 8 Corp. Price and EPS Surprise Hut 8 Corp. price-eps-surprise | Hut 8 Corp. QuoteKey Factors to Note for HUT Ahead of Q4 EarningsHUT’s fourth-quarter performance is expected to have benefited from the continued cost optimization efforts, and the growth of its GPU-as-a-Service business.Hut 8 Corp.’s GPU-as-a-Service business, Highrise AI, is expected to have continued growing and generating revenues in the to-be-reported quarter. The fixed infrastructure payments and revenue share agreements with customers will allow Hut 8 to capture market demand upside in the AI compute market.The company’s ongoing efforts to reduce energy costs are expected to continue delivering positive results. In the previous quarters, Hut 8 Corp. successfully reduced its energy costs by nearly 28%. These cost optimizations are expected to have further enhanced profitability in the to-be-reported quarter.Hut 8 Corp.’s growing data center business, including its Tier I and Tier III facilities, is likely to have contributed to its overall revenues and operational growth in the fourth quarter of 2024. This includes the commercializing of the Vega project and the ongoing development of AI and digital infrastructure capacity.HUT’s growing managed services segment, which includes partnerships and agreements with companies like Ionic Digital, is likely to have continued to drive revenue growth in the fourth quarter of 2024. This segment offers a stable, recurring revenue stream, which will complement the more volatile cryptocurrency mining business.HUT Outperformed Sector, IndustryHut 8 Corp. shares have rallied 83.8% in the trailing 12 months, outperforming the Zacks Finance sector’s appreciation of 20.1% and the Zacks Financial – Miscellaneous Services industry’s return of 9%.One Year PerformanceImage Source: Zacks Investment ResearchHUT shares have also outperformed industry peers like Coinbase Global COIN, LendingClub LC and Columbia Financial CLBK in the same time frame.While COIN and LC shares have soared 6.1% and 57.4%, respectively, CLBK shares have lost 7.5% in the trailing 12 months.HUT Trading at a PremiumHUT stock is also not so cheap, as its Value Style Score of F suggests a stretched valuation at this moment.In terms of the forward 12-month Price/Sales ratio, HUT is trading at 4.36, higher than the Zacks industry’s 2.67.Price/Sales (F12M)Image Source: Zacks Investment ResearchHUT Expands Crypto Mining With BITMAIN PartnershipHUT is expanding its operations in the cryptocurrency mining space through its partnership with BITMAIN, aimed at advancing mining capabilities and increasing revenue potential.In the third quarter of 2024, the company announced a partnership with BITMAIN to develop and host approximately 15 EH/s of the next-generation U3S21EXPH ASIC miner under a colocation agreement, with an option to add the entire hash rate to its self-mining operations by the end of 2025. This partnership expands the company’s mining capacity while providing flexibility for future self-mining growth.The U3S21EXPH, BITMAIN’s first mass-commercialized ASIC miner with direct liquid-to-chip cooling in a U form factor, can achieve up to 860 TH/s at 13 J/TH efficiency and is set for deployment at Vega in the second quarter of 2025, generating an estimated $135 million in annualized colocation revenues at full capacity.Volatile Cryptocurrency Market Poses Headwinds for HUTHUT’s performance is heavily tied to Bitcoin prices, making it highly vulnerable to cryptocurrency market volatility. Fluctuations in Bitcoin prices can significantly impact the company’s earnings, asset valuation and cash flow, creating challenges in financial stability, especially during extended periods of declining Bitcoin prices. Bitcoin mining requires continuous investment in infrastructure and technology, which can strain HUT’s cash flows if Bitcoin prices decline.Energy and cryptocurrency industries are also highly regulated and exposed to macroeconomic uncertainties. HUT remains susceptible to policies that could impact power sourcing, data center operations and Bitcoin mining activities.ConclusionHUT has demonstrated remarkable growth, driven by its diversified business model, strategic investments in Bitcoin reserves and innovative infrastructure designed to capitalize on growing AI workloads.However, HUT’s heavy reliance on Bitcoin, exposure to regulatory risks and an overvalued stock price are concerning.The company’s Growth Score of C makes the stock unattractive for growth-oriented investors.HUT currently carries a Zacks Rank #3 (Hold), suggesting that it may be wise to wait for a more favorable entry point in the stock. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.5 Stocks Set to DoubleEach was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2024. While not all picks can be winners, previous recommendations have soared +143.0%, +175.9%, +498.3% and +673.0%.Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.Today, See These 5 Potential Home Runs >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report LendingClub Corporation (LC): Free Stock Analysis Report Columbia Financial (CLBK): Free Stock Analysis Report Coinbase Global, Inc. (COIN): Free Stock Analysis Report Hut 8 Corp. (HUT): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks