Key Takeaways
- Cipher Digital stock lost 31% in the past week (through Monday’s close). Most of the drop came on Tuesday and Wednesday, as it sold $850 million of zero-interest convertible notes and swapped older notes for about 40.7 million new shares.
- The new notes convert at about $15.31 a share, far above where the stock trades now, so the swap shares are the dilution holders take on today.
- Cantor Fitzgerald cut its price target to $19 from $28 on Friday but kept its Buy rating, so it still sees the stock more than doubling.
- The next tests are Barber Lake’s first rent in the fourth quarter and Cipher’s third-quarter report in early November.
Cipher Digital (CIFR) stock is down 31% in the past week (through Monday’s close), and it’s lost half its value in the past month.
Nearly all of the drop goes back to one financing. Still, Cantor Fitzgerald sees the stock more than doubling.
Zero interest still costs something
Before Tuesday’s open, Cipher proposed $850 million of zero-interest convertible notes due 2032, plus a swap of part of its 1.75% 2030 notes for stock. Shares fell 12.8%.
Short seller Jim Chanos was blunt on X: “These financings are most certainly not ‘zero-cost.'”
The notes priced before Wednesday’s open with a conversion price of about $15.31, a 35% premium to Tuesday’s $11.34 close. The swap traded about $165.9 million of 2030 notes for about 40.7 million new shares. Shares fell another 12.3%.
The new notes only turn into stock if shares climb well past $15.31, and a capped call softens that hit. The swap shares arrive now, on top of a diluted share count that rose 75% over four years.
On Friday, Cantor Fitzgerald cut its target to $19 from $28 but kept its Buy rating, pointing to the sell-off in AI data center stocks. Cipher fell 10.6% as the notes settled. Its rivals slid too, just not as hard.
TIKR tracks 22 analysts on Cipher Digital. How many say “Buy”?
See the full breakdown of Buy, Hold, and Sell ratings on Cipher Digital, along with Wall Street’s revenue and earnings estimates, all in one place. More than 500,000 investors use TIKR to research stocks like this one. See Cipher Digital’s Analyst Ratings
The financing pays for the rent
The money goes to Barber Lake, where an amended lease lifted contracted revenue above $9 billion. Cipher has to put about $750 million more equity into the project, and it carries the first $359.3 million of any overruns. First rent is still expected in the fourth quarter.
Is Cipher a buy after a 31% week?
The consensus target is $30, barely below August’s $33 peak, while the stock sits 70% below its 52-week high.
That patience rests on revenue rising from $219 million this year to $850 million in 2027 as signed leases start paying. The stock trades at 6.7x forward sales, against a three-year average of 11.4x.
The risk is debt: just over $6 billion at June 30, before this week’s notes, against second-quarter revenue of $25 million.
My take: The sell-off looks overdone for investors who can stomach that risk. Cantor’s $19 sits well below the Street’s $30, and getting there mostly takes rent Cipher has already signed.
The next check is Cipher’s third-quarter report in early November. Another Barber Lake delay or another stock sale would break the case.
So what is Cipher Digital stock actually worth?
TIKR lets you forecast the future price of any stock in less than a minute. Just enter a few assumptions into TIKR’s valuation model and see what Cipher Digital could be worth. Start from Wall Street consensus estimates, or adjust the inputs to reflect your own view of the business. It’s free to use.
Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any of the stocks mentioned. Thank you for reading, and happy investing!
