Buy or Sell Cleanspark Stock?

Cleanspark (CLSK) stock has jumped 6.0% during the past day, and is currently trading at $10.55. We believe there is a near-equal mix of good and bad in CLSK stock given its overall Moderate operating performance and financial condition. This is aligned with the stock’s Moderate valuation because of which we think it is Fairly Priced.

Below is our assessment:

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Let’s get into details of each of the assessed factors but before that, for quick background: With $3.0 Bil in market cap, Cleanspark provides bitcoin mining and energy technology solutions, including engineering, software, custom hardware, solar, energy storage, and automated demand response for microgrids and distributed energy systems.

[1] Valuation Looks Moderate

This table highlights how CLSK is valued vs broader market. For more details see: CLSK Valuation Ratios

[2] Growth Is Very Strong

• Cleanspark has seen its top line grow at an average rate of 91.2% over the last 3 years
• Its revenues have grown 68% from $467 Mil to $785 Mil in the last 12 months
• Also, its quarterly revenues grew 11.6% to $181 Mil in the most recent quarter from $162 Mil a year ago.

This table highlights how CLSK is growing vs broader market. For more details see: CLSK Revenue Comparison

[3] Profitability Appears Very Weak

• CLSK last 12 month operating income was $-167 Mil representing operating margin of -21.2%
• With cash flow margin of -64.0%, it generated nearly $-503 Mil in operating cash flow over this period
• For the same period, CLSK generated nearly $-261 Mil in net income, suggesting net margin of about -33.2%

This table highlights how CLSK profitability vs broader market. For more details see: CLSK Operating Income Comparison

[4] Financial Stability Looks Strong

• CLSK Debt was $1.8 Bil at the end of the most recent quarter, while its current Market Cap is $3.0 Bil. This implies Debt-to-Equity Ratio of 63.0%
• CLSK Cash (including cash equivalents) makes up $1.3 Bil of $3.3 Bil in total Assets. This yields a Cash-to-Assets Ratio of 38.7%

[5] Downturn Resilience Is Weak

CLSK has fared worse than the S&P 500 index during various economic downturns. We assess this based on both (a) how much the stock fell and, (b) how quickly it recovered.

2022 Inflation Shock

• CLSK stock fell 95.6% from a high of $40.39 on 7 January 2021 to $1.78 on 19 December 2022 vs. a peak-to-trough decline of 25.4% for the S&P 500.
• The stock is yet to recover to its pre-Crisis high
• The highest the stock has reached since then is $23.40 on 25 March 2024 , and currently trades at $10.55

 
2020 Covid Pandemic

• CLSK stock fell 80.0% from a high of $5.25 on 23 January 2020 to $1.05 on 2 April 2020 vs. a peak-to-trough decline of 33.9% for the S&P 500.
• However, the stock fully recovered to its pre-Crisis peak by 22 July 2020

But the risk is not limited to major market crashes. Stocks fall even when markets are good – think events like earnings, business updates, outlook changes. Read CLSK Dip Buyer Analyses to see how the stock has recovered from sharp dips in the past.

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