Hut 8's 13% selloff over lack of AI tenant 'short-sighted,' says Benchmark after record quarter

Hut 8 Corp. shares fell as much as 13% on Tuesday after the company reported record third-quarter results but did not confirm a hyperscale AI tenant for its River Bend project in Louisiana.

Benchmark Equity Research Analyst Mark Palmer described the selloff as "short-sighted and unwarranted" in a Wednesday note to clients, arguing that traders positioned for a near-term announcement that management never promised.

Palmer said the selloff reflected the "unwind of speculative, 'lottery ticket' positions," obscuring the fact that the company has laid the groundwork for a long-term, high-value enterprise, maintaining the view that Hut 8's approach remains disciplined. "It does not appear to be a question of whether such an announcement will occur, but when," he said. 

However, CEO Asher Genoot did confirm during Hut 8's earnings call that development of the 300 MW flagship facility in West Feliciana Parish — which can eventually scale toward one gigawatt — remains on track to begin operations in late 2026.

"While traders hoped for a near-term pop, Mr. Genoot emphasized that management's focus is squarely on securing the right tenant, not just the fastest one," Palmer said, adding that the firm is "playing the long game" in energy, AI, and bitcoin optionality.

"Hut 8 can afford to wait for a deal that optimizes long-term economics, rather than accept a suboptimal one for a short-term headline," Palmer added. "And given the AI infrastructure boom and the scramble among major cloud and hyperscale players for reliable, affordable power, we find it hard to imagine that River Bend will remain untenanted for long."

Record quarter underscores diversification

Hut 8 posted $83.5 million in revenue for the third quarter, up 91% year-over-year and ahead of consensus estimates of $65.4 million — driven primarily by growth in its bitcoin mining subsidiary, American Bitcoin Corp. Net income rose to $50.6 million from under $1 million a year earlier, supported by gains on digital assets. Adjusted EBITDA also jumped to $109 million — a twentyfold increase over the same period last year —  displaying the impact of higher bitcoin prices, greater scale, and a more diversified platform, Palmer said.

As of Sept. 30, Hut 8 held 13,696 bitcoins worth about $1.6 billion, including 10,278 on its balance sheet and 3,418 owned by American Bitcoin Corp. — propelling it into the top 10 largest publicly traded bitcoin holders, according to Bitcoin Treasuries data .

CFO Sean Glennan said the company has generated nearly $1 billion in incremental value from its bitcoin holdings since Genoot became CEO in February 2024 — including $689 million from price appreciation, $265 million from bitcoin-backed credit facilities, and roughly $32 million in premiums realized through covered call option strategies. Glennan said those results show bitcoin can serve as a "productive reserve asset" that enhances liquidity and reduces reliance on equity.

Benchmark reiterated its buy rating and $78 target for Hut 8 — 62% to the upside from Tuesday's $48.11 closing price, according to The Block's Hut 8 price page . The stock is currently up 4.4% in pre-market trading on Wednesday, per TradingView.

The research and brokerage firm values Hut 8 based on a sum-of-the-parts approach that includes its 1,530 MW of energy infrastructure under development, its 64% stake in the Eric Trump and Donald Trump Jr.-backed American Bitcoin Corp., and its bitcoin reserves. 

"Mr. Genoot addressed the gap between how the market is valuing Hut 8's 1,530 MW of power under development and how it is valuing the power pipelines of its peers," Palmer explained. "He said investors would need to see the company demonstrate its ability to execute on the development of its power pipeline before it would be more fully valued by the market."