Hut 8 (HUT) AI Stock Analysis

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Hut 8

(TSX:HUT)

Rating:49Neutral

Price Target:―

Hut 8's overall stock score is primarily driven by challenging financial performance and valuation concerns, despite some positive technical indicators. The earnings call reveals potential for future growth, but immediate financial difficulties are significant.

Positive Factors

Financial Position

HUT is well-capitalized with $800M+ in bitcoin holdings, $85M in cash, and $300.6M of debt.

Growth Potential

Hut 8’s legacy mining assets are expected to see strong growth and improved profitability from the business following the successful completion of Hut’s transformational fleet upgrade.

Strategic Business Development

American Bitcoin aims to become 'the world's largest, most efficient pure-play bitcoin miner while building a robust strategic Bitcoin reserve'.

Negative Factors

Earnings Miss

HUT reported a miss on top-line and Adj EBITDA driven by investments in Q1.

Operational Challenges

Revenue was negatively impacted by the termination of an agreement with Ionic and delays in new bitcoin mining equipment moving through customs.

Revenue Performance

1Q25 results were light as old contracts and equipment rolled off, with revenue coming in below estimates and consensus.

Hut 8 (HUT) vs. iShares MSCI Canada ETF (EWC)

Market Cap

C$2.47B

Dividend YieldN/A

Average Volume (3M)1.65M

Price to Earnings (P/E)3.8

Beta (1Y)2.02

Revenue Growth15.44%

EPS Growth-134.04%

CountryCA

Employees222

SectorFinancial

Sector Strength82

IndustryFinancial - Capital Markets

Share Statistics

EPS (TTM)-1.81

Shares Outstanding104,220,085

10 Day Avg. Volume1,834,812

30 Day Avg. Volume1,646,622

Financial Highlights & Ratios

PEG Ratio-0.13

Price to Book (P/B)1.16

Price to Sales (P/S)0.00

P/FCF Ratio-16.58

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

C$35.13

Price Target Upside53.74% Upside

Rating ConsensusStrong Buy

Number of Analyst Covering14

Hut 8 Business Overview & Revenue Model

Company DescriptionHut 8 Mining Corp. operates as a cryptocurrency mining company in North America. The company engages in industrial scale bitcoin mining operations. It also owns and operates 38 BlockBoxes in Drumheller, Alberta; and 51 BlockBoxes in Medicine Hat, Alberta. Hut 8 Mining Corp. was incorporated in 2011 and is headquartered in Toronto, Canada.

How the Company Makes MoneyHut 8 makes money primarily through the mining of cryptocurrencies, such as Bitcoin. The company generates revenue by solving complex mathematical problems that secure the Bitcoin network and, in return, earns block rewards and transaction fees in the form of newly minted Bitcoin. These mined Bitcoins can then be held as an asset or sold on the open market to generate cash flow. Additionally, Hut 8 may engage in strategic partnerships and investments that complement its mining activities, such as collaborating with technology providers to enhance mining efficiency or exploring opportunities in blockchain and digital asset innovation. The company's revenue is directly impacted by cryptocurrency market prices, mining difficulty, and operational efficiency.

Hut 8 Financial Statement Overview

Summary

Hut 8's financial statements indicate challenges with profitability and cash flow, with a negative EBIT margin and significant cash outflows from operations. Despite a robust equity position, reliance on debt and negative cash flow metrics highlight financial instability. Improvement in operational efficiency and revenue growth is needed.

Income Statement

Negative

The income statement shows a mixed performance with a gross profit margin of 25.87% in the latest annual report. However, the company is struggling with profitability, evidenced by a negative EBIT margin of -16.21% and a positive but low EBITDA margin of 1.66%. Revenue growth is inconsistent, with a drop from the previous period. This indicates potential challenges in maintaining stable revenue streams and controlling expenses.

Balance Sheet

Neutral

The balance sheet reflects a high debt-to-equity ratio of 0.42, indicating a moderate level of leverage. The equity ratio stands at 65.82%, suggesting the company is primarily financed through equity. Return on equity is relatively low at 2.56%, which may indicate inefficiencies in generating returns for shareholders.

Cash Flow

Negative

Cash flow analysis reveals significant cash outflows from operations, with an operating cash flow to net income ratio of -1.61. The free cash flow to net income ratio is also negative, indicating challenges in converting income into cash. Despite a substantial positive investing cash flow, the overall cash flow situation suggests liquidity concerns.

TTM	Dec 2023	Jun 2023	Dec 2019	Dec 2018	Dec 2017
Breakdown
Income Statement		Total Revenue
193.18M	81.80M	150.68M	81.99M	49.44M	6.74M
	Gross Profit
47.29M	21.17M	-24.97M	2.13M	-23.48M	5.95M
	EBIT
-38.54M	-13.26M	-90.96M	-2.66M	-49.11M	1.38M
	EBITDA
8.81M	1.36M	3.57M	30.40M	-2.76M	2.30M
	Net Income Common Stockholders
261.86M	16.45M	-242.81M	2.13M	-136.77M	567.07K
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
636.90K	47.36M	30.52M	2.95M	3.56M	23.25M
	Total Assets
642.25K	976.87M	412.94M	71.24M	82.90M	45.58M
	Total Debt
0.00	268.75M	47.42M	26.04M	32.37M	0.00
	Net Debt
-636.90K	227.93M	16.90M	23.09M	28.81M	-23.25M
	Total Liabilities
2.60K	333.87M	55.55M	28.54M	50.24M	9.07M
	Stockholders Equity
639.64K	643.00M	357.39M	42.70M	32.66M	36.51M
Cash Flow		Free Cash Flow
-70.75M	-27.30M	-177.74M	5.27M	-91.14M	-3.41M
	Operating Cash Flow
-51.00M	-26.48M	-105.03M	14.51M	-6.77M	49.24M
	Investing Cash Flow
162.27M	87.25M	-103.61M	-9.73M	-90.16M	-52.67M
	Financing Cash Flow
125.04M	-33.45M	99.83M	-5.39M	77.24M	142.92M

Hut 8 Technical Analysis

Technical Analysis Sentiment

Positive

Last Price22.85

Price Trends

50DMA

18.53

Positive

100DMA

23.83

Negative

200DMA

23.78

Negative

Market Momentum

MACD

1.46

Negative

RSI

59.85

Neutral

STOCH

68.82

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:HUT, the sentiment is Positive. The current price of 22.85 is above the 20-day moving average (MA) of 20.34, above the 50-day MA of 18.53, and below the 200-day MA of 23.78, indicating a neutral trend. The MACD of 1.46 indicates Negative momentum. The RSI at 59.85 is Neutral, neither overbought nor oversold. The STOCH value of 68.82 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for TSE:HUT.

Hut 8 Peers Comparison

Overall Rating

UnderperformOutperform

Sector (64)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
Sector *	64 Neutral	$12.64B	9.78	7.67%	17015.08%	12.23%	-6.02%
NDA	56 Neutral	C$255.45M	77.31	5.61%	―	-9.36%	―
HUT	49 Neutral	C$2.47B	3.76	-6.53%	―	15.44%	-134.04%
HIVE		$365.77M	―	-2.15%	―	―	―
BBKCF		$39.78M	―	-101.43%	―	―	―
BITF		$614.08M	―	-16.30%	―	―	―
GLXY		$7.85B	―	-23.34%	―	―	―

* Financial Sector Average

Performance Comparison

TSE:HUT

Hut 8

22.85

9.78

74.83%

HIVE

HIVE Digital Technologies

1.96

-0.67

-25.48%

TSE:NDA

Neptune Digital Assets

1.84

1.52

475.00%

BBKCF

BIGG Digital Assets

0.10

-0.04

-28.57%

BITF

Bitfarms

1.05

-1.16

-52.49%

GLXY

Galaxy Digital

22.95

12.42

117.95%

Hut 8 Earnings Call Summary

Earnings Call Date:May 08, 2025

(Q1-2025)

% Change Since: 30.95%|

Next Earnings Date:Aug 19, 2025

Earnings Call Sentiment Neutral

The earnings call presented a mixed outlook. On one hand, Hut 8 demonstrated strategic growth plans with the expansion of its Power origination pipeline and successful fleet upgrades, contributing to potential future gains. The launch of American Bitcoin is positioned to strategically navigate the Bitcoin mining sector. However, the call also highlighted significant immediate financial setbacks, including a substantial revenue decline, net loss, and increased operating costs. While the company's strategic moves may yield future benefits, the current financial performance reflects notable challenges.

Q1-2025 Updates

Positive Updates

Power Origination Pipeline

As of March 31, 2025, Hut 8's Power origination pipeline spanned approximately 10,800 megawatts with approximately 2,600 megawatts under exclusivity, indicating a strong position for future growth.

Fleet Upgrade and Efficiency

Completed a fleet upgrade, resulting in a 79% increase in deployed hash rates and a 37% improvement in fleet efficiency quarter-over-quarter, enhancing mining economics.

Strong Balance Sheet

Hut 8 ended the quarter with 10,264 Bitcoin held in reserve, representing $847.2 million in market value, indicating solid financial health.

American Bitcoin Launch

The launch of American Bitcoin as a dedicated entity to operate Bitcoin mining operations, aiming to accumulate Bitcoin at scale with exceptional speed and efficiency.

Negative Updates

Revenue Decline

Revenue for the quarter was $21.8 million, down from $51.7 million in the prior year, primarily due to planned downtime and increased network difficulty post-Bitcoin halving.

Net Loss and EBITDA

Reported a net loss of $134.3 million for the quarter versus net income of $250.7 million in the prior year and adjusted EBITDA of negative $117.7 million, impacted by non-cash losses and external economic factors.

Increased Energy Costs

Energy costs per megawatt hour rose to $51.71 from $40.06 in the prior year due to fixed transmission and distribution charges, affecting operating costs.

Company Guidance

During the first quarter of 2025, Hut 8 focused on strategic investments to advance its evolution as an integrated energy infrastructure platform. The company reported a revenue of $21.8 million, a decline from $51.7 million in the previous year, mainly due to planned downtime for fleet upgrades and the April 2024 Bitcoin halving. This resulted in a net loss of $134.3 million compared to a net income of $250.7 million the prior year. Adjusted EBITDA was negative $117.7 million, down from $297 million. The company's energy costs per megawatt hour rose from $40.06 to $51.71, influenced by fixed charges amidst reduced consumption. Despite these challenges, Hut 8 ended the quarter with 10,264 Bitcoin, valued at $847.2 million. The period marked the launch of American Bitcoin, intended to streamline capital allocation and enhance growth in the Power and Digital Infrastructure segments.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.