Greenidge Generation, Post-Merger, Looks Like a Bargain


Greenidge Generation Holdings (NASDAQ:GREE) has taken a serious tumble since its reverse merger with (formerly SPRT symbol) closed on Sept. 14. GREE stock is down from a pre-merger equivalent peak of $316.43 to just $26.15 on Sept. 24. This makes the stock an extremely good bargain right now.

A concept image with the logo for Wrapped Bitcoin.
Source: Vladimir Kazakov /

A major factor in the fall of the stock was the huge amount of shorting in the security prior to the closing of the reverse merger. One report indicated that up to 70% of the stock was shorted before the close. That figure is now below 30% according to a Seeking Alpha report. Yahoo! Finance still does not yet show the actual short interest figure for GREE stock.

However, given the stock’s valuation now, based on the company’s latest presentation, it should begin to enjoy a rebound.

Where Things Stand Now With Greenidge

Based on the closing merger ratio, every 1,000 shares of (SPRT) received 115 new shares in Greenidge Generation (GREE). This means that the premerger closing price of $102.61 (after the merger ratio) has fallen $76.46 per share to $26.15 on Sept. 15. That is a tremendous drop of 74.5%.

This begs a question about the underlying value of the two companies. One is a software and service company, the other an emerging Bitcoin mining company. Did they really have their value deteriorate this much just because of the merger? I highly doubt it.

For example, as I pointed out in my last article on, the investor presentation shows various EBITDA (earnings before interest, taxes, depreciation, and amortization) projections for the combined company.

What Greenidge Is Worth

For example, page 21 of the slide deck shows that the company expects to make $109 million in 2022, on a calendar year basis. But on a run-rate basis, this works out to $224 million.

In both cases, this assumes that Bitcoin (CCC:BTC-USD) averages $49,000 for the year. Right now Bitcoin is at $42,616 per BTC token. This also includes the full benefit of an increased hashrate output of more efficient miners that Greenidge plans to purchase through 2022.

Next, we need to compare this to its market valuation. Right now there are 38.963 million shares outstanding after the reverse merger. This is based on capitalization estimates on page 23 of the slide deck. As a result, based on its price of $26.15 as of Friday, Sept. 24, that makes its new market cap worth $1.018 billion.

Therefore, assuming it makes EBITDA of $102.61 million on a calendar basis in 2022, the Price-to-EBITDA ratio is 9.3 times (i.e., $1.02 billion/$109 million). We really don’t know what the balance sheet looks like now, as it is not clear if the company has raised any money. As a result, we cannot estimate the enterprise value (EV)-to-EBITDA ratio.

However, consider this. On a run-rate basis, the P/EBITDA ratio is low at 4.54 times (i.e., $1.02 billion/$224 million). This could easily double by the end of 2022. For example, at 10 times $224 million, Greenidge would be worth $2.24 billion. With 38.963 million shares outstanding, that puts the price per share at $57.49 (i.e., $2,240 million/38.963 million).

What to Do With GREE Stock

This implies that investors in Bitcoin mining stocks might want to take a look at a new position in GREE stock. This is also true for former SPRT stock buyers. If their buy-in price is above the market price today, consider taking another average cost down into the shares. This is because I believe GREE stock will likely rebound, as I pointed out above.

So far, there are no Wall Street analysts covering GREE stock, at least with a price target. That is why the company’s own projections, as I have shown on their slide deck presentation, are so important. You can use this to put your own valuation on the stock. I have shown two ways to do this above.

The bottom line is that if you expect Bitcoin to rise over the next several years, Greenidge Generation Holdings (GREE stock) is likely to do well.

On the date of publication, Mark R. Hake did not hold any position directly or indirectly in any of the securities mentioned in the article. The opinions expressed in this article are those of the writer, subject to the Publishing Guidelines.

Mark Hake writes about personal finance on and runs the Total Yield Value Guide which you can review here.

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