TeraWulf Inc. (WULF) experienced a significant drop of 5.99% in its stock price during intraday trading on Tuesday. This plummet can be attributed to two key factors:
Firstly, Roth MKM, a financial firm, lowered its price target for TeraWulf from $11 to $9, citing higher costs and ongoing power negotiations as potential challenges. While the firm maintained a Buy rating on the stock, the revised price target reflects concerns about the company's ability to keep its annual average power cost below $0.05/kWh, which is crucial for maintaining stable mining results.
Secondly, TeraWulf disclosed a new risk related to advancements in AI model efficiency. As AI models become more efficient, the demand for TeraWulf's computing power could be impacted, potentially threatening the company's data center business model and revenue streams. Investors reacted negatively to this disclosure, as it raises questions about the long-term viability of TeraWulf's operations.
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