Is RIOT Stock a Solid Long Term Investment?

Trying to decide whether or not you should invest in a particular stock as a long-term investment can be one of the most challenging things that you’ll ever do when it comes to your financial well-being. When you think about it in terms of a company like Riot Blockchain, traded publicly on NASDAQ as RIOT, things get a lot more confusing. In addition to dealing with the normal questions that would automatically come with trying to determine whether or not a stock is a good long-term option, you also have the added complexities that are associated with cryptocurrency. Some people are in favor of investing in this type of stock because they think that it’s something that can eventually net them a big payday. Other investors are far more cautious. After all, cryptocurrency has been one of the most volatile types of stocks in existence in the last 10 years. It’s easy to understand why people would be apprehensive about investing in it, especially in the long-term. Nevertheless, it’s possible that your curiosities are piqued. If that’s the case, then it’s time to take a closer look at the stock in order to try and decide whether or not it might be for you.

Background

In order to better decide whether or not this is something that you might be interested in getting involved with, it’s important to learn a little bit about the history of the company. You might be surprised to learn just how long they have been in business. As it turns out, they’ve been operating since 2000, meaning that they’ve been going at this whole cryptocurrency thing a lot longer than most of the other companies out there. Although there are companies in business that have been doing it for a longer period of time, there aren’t that many. If you really have a burning desire to invest in a cryptocurrency company as a long-term investment, the fact that they’ve been in business for the last 22 years should give you at least a little bit of hope. After all, they must be doing something right or they wouldn’t have made it this long. As of today, the stock is available for $16.22 per share, a slight increase over its price when trading open this morning (24 February). Considering the fact that the company only has about eight employees, it’s rather interesting to know that they have not only been in business successfully for a number of years, but their stock is going up at a time when the stock market is extremely volatile and just about everything else is caught in a downward slope. The question is, what are they doing differently from everyone else that has the stock market buzzing?

Recent Performance

Recently, the stock has not performed nearly as well as it is right now. In fact, it’s plummeted more than 61% since early November of 2021. Even then, it was still selling for a little more than $30 a share. The fact that it’s now selling for $16 a share should tell you a lot about the situation, considering the fact that you can now purchase the stock for roughly half what you could at the end of last year. However, it’s also worth noting that the stock is on its way back up. That in and of itself is enough to get the attention of most investors. The fact that it’s capable of going up when world news has caused the stock market in general to plummet is something else entirely. One of the reasons that some stock market analysts have such faith in this particular stock is the fact that the company has put a great deal of effort into ensuring that they have everything lined out from a technical perspective. That can be difficult to do but it’s also something that’s crucial for any cryptocurrency company. In fact, it’s something that should be at the top of their list. Any company that deals with cryptocurrency and doesn’t have state-of-the-art technology is asking for a problem. Unfortunately, these types of companies take everyone that has invested in their cryptocurrency down with them when they fail, usually because someone has hacked into the system and gotten the bank account information of virtually every customer. Cryptocurrency is volatile enough without having to worry about security issues on top of everything else. The fact that this particular company has put top-notch security and technological advancement at the forefront of everything they do sets them apart from just about everyone else in this particular line of business. If they have a single saving grace, this is it.

Quarterly Performance

If you’re like most people, you’re probably still quite confused about whether or not you should consider even going near the stock as a long-term investment. In order to help clear up the confusion, consider the company’s quarterly performance as compared to this same time last year. For their second quarter this year, they reported a revenue of $31.5 million. If you compare that to last year’s second quarter earnings, the company only made $1.9 million. That is an absolutely massive difference, something that blows virtually everything else out of the water. If you want to put a percentage to it, the difference between their second-quarter earnings for both this year and last involves a 1,540% gain. As a matter of fact, most stock market analysts believe that even though the company deals with something that can be extremely volatile, this particular company is on solid financial ground. Many of them are willing to double down on that statement and say that the company is more than capable of handling a few slumps that might come their way. If that’s the case, then perhaps they are the company worth investing in for the long-term, even if they are involved in something that makes a lot of people feel more like running away as opposed to embracing the idea.

Getting the Green Light

Even though the very idea of investing in a cryptocurrency company can be frightening beyond measure, there are a lot of things this company has going for it to make it stand out in all the best ways possible. For starters, you can’t deny its increase in profitability between one year and the next. Granted, a lot of it is dependent on the fact that the price of Bitcoin itself has gone up as of late. Not surprisingly, that makes a lot of investors more concerned than anything. Traditionally, Bitcoin has been extremely volatile. One day, it’s up and the next day, it’s worth less than it was the last time it went into a slump. That can be concerning and there’s no doubt about that. In fact, that’s the very reason that so many investors are apprehensive about investing in anything related to Bitcoin in the first place. That said, this particular company does do things a little bit differently than a lot of other companies that deal in cryptocurrency. As a matter of fact, they have a very solid financial structure that is designed specifically to allow them to successfully weather the types of storms that commonly come with cryptocurrency. It was something that they insisted on setting up that way from the beginning. According to many experts, it’s also precisely why the company is still in business more than two decades after they were founded. When you stop and think about it, this makes sense because a lot of other companies that were founded around the same time have come and gone. Because of the way that this particular company operates, many stock market analysts believe that they are a good long-term investment because they seem to have the staying power that’s required for long-term survival.

It All Hinges on One Thing

The thing that makes this a risky investment is the fact that the company’s success as a long-term investment all hinges on a single thing. In order for them to remain successful, Bitcoin has to keep going up in value over the course of the next several years. There is absolutely no guarantee that this is going to happen. In the past, it’s been extremely volatile, with ups and downs that seem to be almost completely unpredictable. More recently, it seems to have stabilized a little but that doesn’t mean that it’s going to stay that way. The thing that makes investors so nervous is that cryptocurrency seems to rise and fall as frequently as the tide. Counting on Bitcoin to be worth more three or four years down the line than it is today is a risky assumption in and of itself. As far as the company is concerned, Riot is fairly solid. It doesn’t necessarily mean that they would continue to be that way if something catastrophic happened to Bitcoin that couldn’t be resolved in a relatively short amount of time. Granted, they have built-in something of a failsafe plan into their financial system so that they can stay afloat when others might fail, but even they can’t keep going forever if the whole concept of cryptocurrency starts going down the toilet again like it did a few years ago. How are you supposed to know whether or not it will happen again? The problem is, you don’t know. You have to take the risk and hope that it works out in your favor.

The Other Side of the Story

So far, you’ve heard about the overwhelming majority of stock market analysts that believe that this is a stock worth considering as a long-term investment, despite the fact that they’re dealing with a type of business that is exceptionally volatile. Now it’s time to hear from those stock market analysts that don’t necessarily agree with this assumption. Rest assured, they are out there. There are quite a few analysts that see a few technical issues that could become bona fide weaknesses in the relatively near future, something that seriously jeopardizes the stock’s ability to remain on a solid foundation. In addition, many of the same analysts don’t believe that the company is capable of maintaining the growth that it has seen over the course of the last year. Aside from the fact that the entire company is set up to deal with something that is extremely unpredictable and highly volatile, it’s almost impossible to maintain that level of growth, regardless what type of business is in question. As far as these analysts are concerned, investors should not go near this stock, especially not as a long-term investment.

By this time, you’re probably highly confused. It doesn’t help that you have a number of stock market analysts telling you that everything is great and you should buy the stock and then you have others telling you that you should run away from it as fast as you can. One thing is certain. If you don’t thoroughly understand cryptocurrency and how it works, you’re doing yourself a disservice to invest in a company that deals with it. There are several nuances involved in this type of business that can make or break a company. If you don’t understand those nuances, then your first step should be to educate yourself about the world of cryptocurrency before further examining whether or not this company is solid enough to invest in it. As in most cases, there really isn’t a blanket answer here. Whether or not you should invest depends on a number of factors such as how much risk you are comfortable with assuming and how much money you have to spend, knowing that you could potentially lose every bit of it. At the end of the day, you have to make the decision. However, it’s important to know exactly what you’re potentially getting into before you start buying up shares in droves.