Why Is CIFR Stock Falling Despite Wellington’s Stake Increase?

CIFR stock has fallen about 44% from its July high as Texas' review of data-center projects adds a fresh regulatory overhang.

• Shares of Cipher Mining extended their slide after posting their worst daily drop of the quarter on Tuesday.
• Wellington Management Group LLP boosted its Cipher stake by approximately 568% in the second quarter.
• Wall Street still sees substantial upside, with Koyfin data showing an average price target of $32.18.

Shares of Cipher Digital (CIFR) extended their slide in pre-market trading on Wednesday after closing down over 5% in the previous session, its weakest close of the quarter.

The drop stands in contrast to aggressive institutional buying. Wellington Management Group LLP raised its position in Cipher in the second quarter, increasing its holding to about 3.9 million shares as of June 30, from roughly 597,000 shares at the end of March, according to a quarterly statement filed with the U.S. Securities and Exchange Commission – an increase of over 550% in just one quarter.

Why Has CIFR Stock Been Falling?

CIFR stock has remained under pressure since mid-July, with shares now about 44% below its July high. This comes as potential implications from Texas’ new data center review process weighed on investor sentiment.

In early August, Keefe Bruyette lowered its price target to $28 from $32 but kept an ‘Outperform’ rating. In its research note, the firm said that expectations for a favorable resolution had increasingly given way to an open-ended regulatory overhang following the Texas Governor Greg Abbott’s directive on data center audit.

On August 3, Abbott had ordered the Public Utility Commission of Texas (PUC) and the Electric Reliability Council of Texas (ERCOT) to carry out a "comprehensive verification and audit" of all data centers in the ERCOT interconnection process before any further data centers can proceed.

Wall Street Cuts Targets But Remains Bullish

Several other firms have also trimmed their price targets on Cipher in past few weeks. Morgan Stanley (MS) reduced its price target for Cipher stock to $43.50 from $47 but maintained an overweight rating, while JP Morgan cut its price target to $22 from $33 and also kept an ‘Overweight’ rating, citing good progress on planned deliveries and the acceleration of phase one of Black Pearl by two months.

However, Wall Street's broader price target remains substantially above the current stock price. According to Koyfin data, the average price target sits at $32.18, roughly 120% above Tuesday’s close.

Retail Investors Remain Divided On CIFR Stock

CIFR stock was down over 1% in pre-market trading. On Stocktwits, retail sentiment around CIFR remained in the ‘bearish’ zone, while chatter stayed at ‘low’ levels over the past day. 

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On Stocktwits, one user said that the dip in the stock was part of a broader market sell-off rather than just a company-specific problem. 

View this Stocktwits post

Several users agreed, saying Terrawulf (WULF), Iren (IREN), and other data center stocks were nearing a bottom and reiterating that they were bullish on these stocks. They said Cipher's long-term prospects remain bullish and urged fellow shareholders to stay patient rather than sell into the downturn.

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