In the past month, Bitcoin-mining company Bitdeer Technologies’ (NASDAQ:BTDR) stock has plummeted approximately 70%, taking the stock from a price of $9.84 a share to a low (as of this writing) of $3.03 a share. 

Advocates of the company argue that the price drop is not due to fundamental reasons but rather due to the end of the stock’s lock-up period. Following a company's initial public offering, some of its shares may undergo a ‘lock-up period,’ during which investors are restrained from selling shares for a set period of time. 

According to SEC filings, approximately 95% of Bitdeer’s shares had been subject to a lock-up agreement and were unable to trade on the open market. 

The lock-up severely reduced the number of shares open for trading – what is called the ‘float’ – making it difficult for traders to find sufficient liquidity for trading. According to page 25 of the SEC filing, the lockup period occurred for “a period of 180 days” since the merger, meaning that Oct 10th was officially the last lock-up day period.

The consensus among Bitdeer’s advocates is that the end of the lock-up period has led to a major selling spree in the stock by early investors that have owned stock in the company since its inception, driving its price down roughly 70% in October. However, Bitdeer’s advocates reference the company’s revenue, adjusted EBITDA, Total Hash Rate, Enterprise Value/Revenue (EV/R) and EV/Adjusted EBITDA against its competitors Riot Blockchain (NASDAQ:RIOT), Marathon Digital Holdings (NASDAQ:MARA) and others to argue for the ‘oversold’ condition of the company’s stock. 

The findings are summarized below: 

Source: Bitdeer Technologies Group

• Bitdeer’s revenue in Q2 of 2023 was $94 million, while Marathon’s was $82 million and Riot’s $77 million.
• Bitdeer’s Adjusted EBITDA in Q2 of 2023 was $19 million compared to MARA’s $26 million and Riot’s $24 million. 
• Bitdeer’s total hash rate stood at 21.3 exahash per second, while MARA’s stood at 23.1 and Riot’s at 10.9. 
• Bitdeer’s EV/Adjusted EBITDA stood at 5.4 as of 10/13/2023 while Marathon’s stood at 17.1 and Riot’s at 12.2. 

Bitdeer’s advocates claim that while holding similar or better revenue, EBITDA and total hash rates than its peers, Bitdeer’s stock price has deteriorated far more than its competitors, which might suggest the lock-up expiration is the main driver of recent price movement. These arguments have been used to grant Bitdeer an ‘undervalued’ designation by its advocates, a sentiment that H.C. Wainwright has echoed. 

HC Wainwright recently covered Bitdeer and called the company “under the radar.. with compelling growth prospects.” HC Wainwright issued a $20 price target, which could yield nearly 7x returns based on the current share price. 

Speaking on the end of the lock-up period, a Bitdeer spokesperson said:
“In the past, one of the biggest concerns we got from potential investors was the lack of float and tradable shares. Now that the lock-up expiration has increased our float and liquidity substantially, our impediment to attracting new long-term investors has been removed.

Although in the near term, increased turnover inevitably leads to stock price volatility, we believe such volatility is merely a reflection of technical issues as a result of temporary market dislocation. Our business fundamentals remain solid as demonstrated in our recently published operations update. In addition, as our management team openly, actively, and regularly communicate with analysts and investors, we are confident that our strong business fundamentals will eventually manifest in our stock performance once the near-term market dislocation dissipates.”

Featured photo by Markus Spiske on Unsplash.

This post contains content sponsored by Bitdeer. Information about Bitdeer in this post is provided by Bitdeer. This content is for informational purposes only and is not intended to be investing advice.