Significant Drop in Share Prices

Shares of Keel Infrastructure Corp. (KEEL) experienced a dramatic decline during midday trading on Thursday, falling over 20%. This downturn is marking the stock’s lowest point in the last fourteen months, with predictions indicating they may hit a 14-month low.

As of report time, the stock price had dropped approximately 18% to $1.73, plummeting from a recent high of around $4 in late September and nearly three-quarters from its peak value of $7 reached in June.

Financial Report Highlights

Keel’s revenue has seen a staggering decline of 59%, dropping from $68 million in the previous year to $27.6 million. This drastic reduction is primarily attributed to the company’s decision to halt Bitcoin mining operations in the United States, shifting its focus towards high-performance computing (HPC) and artificial intelligence (AI) development. Additionally, a decrease in Bitcoin prices further impacted revenues.

Interestingly, the reported revenue surpassed analysts’ expectations by 29%, as they had anticipated $21.5 million. This marks a divergence from the company’s recent trend, where revenue estimates were missed for four consecutive quarters.

Despite overall revenue challenges, Keel reported losses widening significantly during the quarter. The loss from continuing operations rose to $62 million, equating to $0.10 per share, a sharp increase from the $11 million or $0.02 per share a year prior, and slightly above analysts’ expectations of a $0.09 loss per share. This widening loss was largely due to a $55 million non-cash loss linked to capped calls associated with its convertible notes for 2025.

Bitcoin Holdings and Future Strategy

As outlined in the earnings report, Keel sold a total of 2,520 Bitcoin during the third quarter, generating $192 million from these transactions. This included the liquidation of its treasury position of 2,261 Bitcoin in addition to the 259 Bitcoin mined during this period, indicating that the company’s Bitcoin holdings have become negligible as of September 30.

Moving forward, Keel plans to sell the Bitcoin mined in Quebec daily, effectively insulating the company from fluctuations in Bitcoin prices associated with treasury holdings.

Lease Negotiations and Upcoming Developments

Amidst these financial challenges, CEO Ben Gagnon has highlighted ongoing negotiations for leases at three near-term sites, asserting that multiple “creditworthy parties” are in talks, indicating healthy competition for these locations.

Gagnon expressed confidence in securing beneficial leases, stating, “I have every confidence we will sign the right leases for each site, ones that deliver the most attractive returns for our shareholders.”

Construction at the Moses Lake site commenced in September after receiving necessary permits. This location is anticipated to begin generating HPC revenue by 2027, signifying the company’s strategic shift toward HPC technologies.

As of now, Keel holds approximately $780 million in unrestricted cash, with Chief Financial Officer Jonathan Mir noting no immediate need for debt or equity financing prior to finalizing a lease.