Key Takeaways
- • Leopold Aschenbrenner's Situational Awareness raised its Riot Platforms stake 49% to 17.10 million shares as of June 30, worth $468 million and representing 2.3% of its $20.17 billion in US stock holdings, making Riot its 10th-largest position.
- • Jeff Smith's Starboard Value cut its Riot stake 35% to 10.11 million shares worth $277 million, yet Riot still accounted for 6.1% of Starboard's $4.52 billion US equity portfolio, its eighth-largest holding.
- • Analysts expect Riot revenue to climb from $647 million in 2025 to $1.24 billion in 2028, but they forecast losses every year through 2028 and negative free cash flow of $1.5 billion in 2027 and $1.7 billion in 2028.
- • Riot must replace a $573 million Morgan Stanley bridge loan due Dec. 31, a financing test that TIKR identifies as the next major milestone for the stock.
Summary
According to 13F filings for the quarter ended June 30 (filed Aug. 14), Situational Awareness added to its Riot position while Starboard Value trimmed its stake. Riot shares have fallen 53% since June 30, though the filings do not disclose purchase prices or whether the funds still hold the shares. The 13Fs for the quarter ended Sept. 30 are due by Nov. 16.
Management puts Riot's contracted data center revenue at about $9.8 billion, drawn from leases with AMD and an AI lab that Bloomberg reported is Anthropic, a company that has not confirmed the arrangement. That lab accounts for $9.1 billion of the total. Analysts' 2028 revenue estimate rose 22% between June 30 and Oct. 23, even as the share price declined. The leases are capital-intensive, and interest expense of $390 million in 2028 compares with projected EBITDA of $409 million, according to TIKR.
By forward sales, Riot trades at 6.8x, down from 16x in late June but still above its five-year average of 6.2x. The 22 analysts covering the stock have an average target of $29.02, down from a peak of $32.52 on Sept. 29. Cantor Fitzgerald cut its target to $24 from $30 on Oct. 16, citing rising financing costs, and ATB Cormark Capital Markets lowered its target to $30 from $36 on Oct. 22. The lowest target is $13. Riot has an unused $500 million at-the-market share program as a fallback if project financing proves costly, and it reports Q3 results in early November. A signed lease for its Corsicana campus, currently only a letter of intent, would strengthen the bull case.
On TIKR's numbers, Starboard's trim is the stronger position for now, given that Riot still trades above its historical multiple and most of the justifying revenue arrives in 2028. TIKR's analysis indicates that financing should be secured before following Aschenbrenner's position.
Management puts Riot's contracted data center revenue at about $9.8 billion, drawn from leases with AMD and an AI lab that Bloomberg reported is Anthropic, a company that has not confirmed the arrangement. That lab accounts for $9.1 billion of the total. Analysts' 2028 revenue estimate rose 22% between June 30 and Oct. 23, even as the share price declined. The leases are capital-intensive, and interest expense of $390 million in 2028 compares with projected EBITDA of $409 million, according to TIKR.
By forward sales, Riot trades at 6.8x, down from 16x in late June but still above its five-year average of 6.2x. The 22 analysts covering the stock have an average target of $29.02, down from a peak of $32.52 on Sept. 29. Cantor Fitzgerald cut its target to $24 from $30 on Oct. 16, citing rising financing costs, and ATB Cormark Capital Markets lowered its target to $30 from $36 on Oct. 22. The lowest target is $13. Riot has an unused $500 million at-the-market share program as a fallback if project financing proves costly, and it reports Q3 results in early November. A signed lease for its Corsicana campus, currently only a letter of intent, would strengthen the bull case.
On TIKR's numbers, Starboard's trim is the stronger position for now, given that Riot still trades above its historical multiple and most of the justifying revenue arrives in 2028. TIKR's analysis indicates that financing should be secured before following Aschenbrenner's position.
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