GREE has had a couple of large spikes over the past year, most of which have been between 100-200% increases. However, in September $GREE spiked from $30 to $300 representing a 10x in price. Since then, the stock has cooled off and has been on a 1-month long downtrend. This was the case until recently, when GREE ran from $20-27 (Friday October 29th), which has many retail investors excited at the prospect of another large spike. Although there is a lot of hype around their stock, this report will look at the fundamental aspects of their business to determine if there is more than just hype around this stock.
Greenridge (along with their subsidiaries) own and operate bitcoin mining and power generation facilities in Dresden, New York. Greenridge solely mines Bitcoin, and after it is mined, they sell it on the open market for it's market value at the time of sale. Furthermore, Greenridge sells their additional power (that is not consumed by mining) that is generated from their power plant to the New York Power Grid.
This year, $GREE acquired $SPRT, which has been added to their list of subsidiary companies. This acquisition will be discussed in more detail later in this analysis.
Greenridge entered into a definitive agreement and plan of merger for a business combination with $SPRT - Support.com Inc. on March 19th, 2021.
Since then, the 2 companies have merged (on September 14th, 2021), in which each $SPRT share was converted to 0.115 shares of $GREE.
Support.com is a leading provider in customer and technical support solutions for remote employees. Support.com has worked with large enterprises and top businesses for the last 20 years and has become very relevant over the past year or so due to the remote work environment implemented as part of our fight against COVID-19.
Moving forward, there is high hopes for Support.com, as the work from home environment is expected to continue even after the pandemic is over.
Increase in Authorized Capital:
On September 13th, $GREE increase their authorization of capital for Class A common shares from 400M to 2.4B. This is a very large increase (6x or 500%). As an outsider looking in, I would interpret this as possible future dilution, as they currently only have 34M shares outstanding. There would still be a lot of room for dilution if the authorization was still 400M, let alone 2.4B, which makes me think that they may increase their shares outstanding above 400M in the near/mid-term future.
Furthermore, in their 10-Q filing they noted that there could be significant share dilution if they choose to raise capital.
Since $GREE does not have sufficient financial ratios, and they do not offer a dividend (and never plan to), the only way that I could value them was based off of a Discounted Cash Flow (DCF) model.
I was able to come to the figures for Greenridge's gross profits by taking the average annual growth rate of Bitcoin. I did this because $GREE only deals with Bitcoin, and almost all of their revenue comes from their Bitcoin Operations. By doing this I found the average annual price increase of Bitcoin (since 2016) to be 70%, furthermore, GREE has been increasing their Bitcoin mining capacity by 40% YoY.
I forecasted Greenridge's operating expenses to increase by 65%. This is due to the fact that their operating expenses have been growing near this rate over the past 2 years.
$GREE reported their annual tax rate to be 30%, I used this tax rate as their tax rate over the next 10 years.
I found $GREE's WACC to be 27%, which can be seen in my DCF (attached at the bottom of this analysis). This WACC is consistent with other Bitcoin and crypto mining stocks.
My DCF model concluded that $GREE is $70/share, which implies an upside potential of 157.45%. This seems quite outlandish at first, and for good reason as it is very difficult to forecast the price of Bitcoin.
However, there is one price target out on $GREE, which is $82/share. Although this is not concrete evidence by any means, it does mean that there is someone else who thinks that $GREE is wildly undervalued.
I do believe that social sentiment has a big role to play in a potential spike in the $GREE stock. I have chosen to analyze $GREE's Stocktwits and Reddit communities in order to get a good sense of their social sentiment.
The $GREE Stocktwits community is comprised of over 30,000 followers and has approximately 4,000 messages per day. Overall, the $GREE Stocktwits community has a bullish sentiment, with 88% of the posts being labelled as “bullish”.
The $GREE Reddit community is significantly smaller than the $GREE Stocktwits community, with only 3.5k members. Although there was a lot of posts recently (due to their spike) typically there are not enough posts in the $GREE Reddit. However, the sentiment in their subreddit is very bullish.
Overall, there is a bullish social sentiment on $GREE, and these investors are looking forward to another pump in the share price.