Shark Bites: I'm Eyeing This Stock as a Safer Bitcoin Play
Let's check in on the market — including moves by Palantir, IonQ and Tesla — and why I like the chart of this bitcoin miner.
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Stocks are struggling again on Monday morning, with breadth running about even.
There are some pockets of very poor action in recent big gainers like Palantir PLTR and IonQ IONQ and even more struggles in biotechnology, following the worst week since the Covid panic.
The Magnificent Seven, as seen in the Roundhill exchange-traded fund MAGS, is acting better, with strength in Tesla TSLA offsetting weakness in Nvidia NVDA. I'm still optimistic about Nvidia in front of its earnings on Wednesday.
One name I'm adding this morning is TeraWulf, Inc. WULF. WULF started as a bitcoin-mining firm, but it has evolved into and is now offering High Powered Computing (HPC) services that are used for AI and other data-intensive activities.
TeraWulf is fully funded to execute its growth plans through 2025, and it is targeting about 250 megawatts of HPC by the end of 2025. Analysts are expecting one or two HPC deals to be secured by the end of 2024. The company had revenue of $27.1 million in the third quarter, which was an increase of 43% over 2023.
As a bitcoin miner, the stock is leveraged to the price of bitcoin, but the diversification into HPC provides a floor and will help the stock withstand downside volatility in bitcoin. I like the combination of Bitcoin upside combined with the support of HPC demand.
In the third quarter, Stanley Druckenmiller's Duquesne Family Office increased its holdings in WULF to 2.94 million shares from 2.09 million. Recent price targets are $9.50 from Needham, $10 from Northland, $11 from Roth, and $11 from Cantor.
Technically, the stock pulled back last week and is testing support for the $7 area. There is still a small gap on the chart down to $6.50, but there is very significant support at $6. I added some today and will be looking for more entries. I am expecting HPC deal news to provide a positive catalyst.
The market action is very messy currently, but I believe this will be a good setup as we head into positive seasonality next week. The market ran too hot and too fast on the election and it needs some time to digest. I do not believe that this is the start of downtrend.
At the time of publication, DePorre was long NVDA, WULF.
