The cryptocurrency market has staged a remarkable rally in the post-election market, with Bitcoin (BTCUSD) breaking out to new highs above $100,000 amid expectations for a more favorable regulatory environment under the incoming administration. This surge higher has also been supported by historically bullish post-"halving" price trends, as well as the increasing popularity of derivatives like spot Bitcoin ETFs and options.
The breakout in Bitcoin has not only lifted digital asset values; it's also reignited interest in stocks with ties to the broader blockchain ecosystem, such as Bitcoin miners, payment processors, and more. One of the leading names of this surge is MicroStrategy (MSTR), the largest corporate holder of Bitcoin, with MSTR stock now boasting a year-to-date gain of 478%. While analysts recommend MSTR as a “Strong Buy,” largely on the basis of its Bitcoin exposure, the stock's steep valuation has also prompted concerns that it's getting a little frothy - including from Andrew Left of Citron Research.
Against this backdrop, here's a look beyond MicroStrategy at three more stocks that stand to benefit from the booming crypto market: PayPal Holdings (PYPL), Iren Limited (IREN), and Riot Platforms (RIOT).
#1. PayPal Stock
Founded in 1998, PayPal Holdings (PYPL) is a global leader in financial technology, providing a secure platform for digital payments and financial services. With over 400 million active users globally, it is well-positioned to capitalize on the cryptocurrency boom by leveraging its existing infrastructure and growing footprint in digital payments.
PayPal launched Venmo's digital wallet and peer-to-peer payments app in late 2020, allowing users to buy, hold, and sell major cryptocurrencies like Bitcoin and Ethereum (ETHUSD) directly through its app. Last year, the company took another step toward solidifying its role in the crypto ecosystem by introducing the stablecoin PayPal USD. PYUSD is built on the Ethereum blockchain using the ERC-20 standard and is designed for digital payments and Web3 applications. It allows for seamless transfers, exchange with other cryptocurrencies, and use in e-commerce transactions.
More recently, PayPal broadened its crypto offerings by allowing merchant accounts to buy, hold, and sell cryptocurrencies through business accounts, as well.
Valued at $90.2 billion by market cap, shares of the digital payments company have climbed 46.6% on a year-to-date basis, outpacing the S&P 500 Index ($SPX).
Notably, former PayPal COO David Sacks has been named by President-elect Trump as the incoming White House AI and Crypto Czar, which could bode well for the regulatory environment going forward.
Despite this year's outperformance, PYPL is reasonably valued at current levels. PYPL trades at 19.69x forward adjusted earnings and 2.85x forward sales, with both metrics representing a discount to the stock's historical average valuations.
In its Oct. 29 third-quarter earnings report, PayPal reported adjusted earnings per share (EPS) of $1.20, which topped the $1.07 consensus, but revenue of $7.85 billion fell short of estimates. Total active accounts increased to 432 million, topping expectations, while total payment volume of $422.6 billion also surpassed the consensus.
In a Monday note, BofA analysts upgraded PayPal to “Buy” from “Neutral,” alongside a price-target hike to $103 from $86. Overall, the stock is rated “Moderate Buy” on Wall Street, with the average price target of $89.40 roughly flat with Monday's close.
#2. Iren Limited Stock
Founded in 2018, Iren Limited (IREN), formerly Iris Energy, is a Bitcoin mining company that specializes in utilizing 100% renewable energy sources, leveraging low-cost, excess renewable power primarily from Canada and the United States. Its data centers, located in regions with underutilized infrastructure, such as British Columbia and Texas, offer a total capacity of over 180 MW, with plans to expand further.
Iren Limited employs a vertically integrated model, owning and operating all aspects of its mining facilities, from land and grid connections to data centers. The firm has also begun diversifying into high-performance computing (HPC) and artificial intelligence (AI) services to create additional revenue streams, bolstered by partnerships and investments in cutting-edge NVIDIA (NVDA) GPUs.
IREN stock has been on a bull run, soaring 102% so far in 2024.
In its Nov. 26 fiscal first-quarter earnings report, IREN reported revenue of $49.6 million, down 8.7% from the year-ago period, which fell slightly short of Wall Street's expectations. AI Cloud Services revenue increased 28% during the period to $3.2 million.
Q1 net loss totaled $51.7 million, while adjusted EBITDA arrived at $2.6 million. IREN booked an operating cash outflow of $3.8 million for the period, with cash and equivalents of $98.6 million at the end of the quarter.
Analysts remain optimistic about IREN stock, with nine rating it a “Strong Buy” and one recommending a “hold.” The average price target is $17.94, indicating expected upside potential of 23.6% from current levels.
#3. Riot Platforms Stock
Founded in 2000, Riot Platforms (RIOT) specializes in a vertically integrated approach to Bitcoin mining, with operations in central Texas and Kentucky. Riot also manages electrical switchgear engineering and fabrication operations in Denver, Colorado. The company focuses on innovative strategies to optimize mining efficiency and mitigate risks associated with Bitcoin price fluctuations, including large-scale expansion projects to increase its self-mining hash rate, which is expected to reach 28 EH/s by the end of 2024.
Valued at $3.72 billion by market capitalization, RIOT stock has underperformed this year, declining over 27% year-to-date. However, the stock has rebounded 76% from its 52-week low of $6.36, set on Sept. 6.
Following the recent bullish trend, Riot trades at a premium with a price-to-sales ratio of 9.6, significantly higher than the sector average of 3.2x and its own five-year historical valuation.
In its Oct. 30 earnings report, RIOT reported a third-quarter net loss of $0.54 per share - wider than the average analyst estimate of $0.21 per share, as well as its year-ago loss of $0.44. Revenue totaled $84.8 million, up from last year's $51.9 million, but short of Wall Street's $91.7 million consensus.
However, RIOT continued to mine BTC almost unaffected by the halving event, with 1,104 BTC generated during the period, compared to 1,106 in the year-ago quarter. The company's cost to mine that Bitcoin did increase, though, largely due to a 75% decline year-over-year in power subsidy credits.
Overall, analysts have given RIOT stock a consensus " Strong Buy " rating, with the average price target at $17.31 - a premium of 54.4% to current prices.
