HIVE Blockchain (TSX-V:HIVE) was the big news of the week in the Canadian small cap space last week. HIVE opened Monday morning at C$.74 after having completed a financing at C$.30 the week before. HIVE proceeded to rally as high as C$2.27 before pulling back a bit on Friday and ending the week at C$1.82, up more than 500% for the week:
HIVE now sports a more than C$400 million market cap and just announced the acquisition of a second data centre for $C5 million and 2,000,000 shares of HIVE common stock. There is no doubt that HIVE is committed to rapid growth, and the partnership/synergies with Genesis Mining helps to make the company’s lofty growth plans a very real possibility. While it’s difficult to justify a C$412 million market cap based upon the company’s current revenues/profits, markets are always willing to pay up for high rates of growth and that seems to be exactly what is happening with HIVE.
Zooming into a five day, 5-minute chart, we can see that the C$1.65-C$1.70 area should offer solid support, whereas C$2.00 followed by C$2.27 (Thursday’s high) are resistance:
Since investors have so little data and company history with which to construct some sort of model for future growth & earnings, valuing a company such as HIVE is exceedingly difficult. From my vantage point I could see HIVE being worth anywhere from C$200 million to C$1 billion; earnings/revenue growth rates, the growth of the cryptocurrency space, and ultimately the valuation multiples which investors are willing to pay for HIVE will be critical, yet exceedingly difficult to gauge at this point.
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