Hut 8 Stock Sinks After Democratic Midterm Wins

Hut 8 Corp. (NASDAQ:HUT) shares are tumbling Wednesday after Democratic midterm victories stoked fears that regulatory hurdles could postpone data center construction and slow the buildout of AI infrastructure.

Hut 8 shares are sliding. Why is HUT stock dropping?

Hut 8 Stock Slides On Midterm Data Center Worries Investors are selling AI infrastructure names Wednesday, Hut 8 included, after the midterm elections handed Democrats a string of major wins. The worry is that added regulatory obstacles could hold back new data center projects while dragging on the expansion of AI capacity.

Democrats captured both chambers of Congress, and CNBC notes that the party is seen as favoring moratoriums on data center building.

The Texas governor’s race caused the most concern. Democrat Gina Hinojosa won it, knocking out incumbent Greg Abbott, a Republican, on a platform of tougher restrictions on data centers that included an immediate statewide moratorium. Wells Fargo says 27% of the data center power capacity slated for U.S. development is in Texas.

Hut 8 has skin in the game, since it plans to acquire two West Texas sites that already have power, offering as much as 230 megawatts.

In a note published Wednesday, Dan Ives of Yorkville Ives & Co predicted the results will “slow the pace” of data center construction across the U.S. Ives also called Texas a leading worry. Pressure on the sector predated the election, since doubts over data center spending pushed the Nasdaq-100 into a correction in late October.

Wells Fargo’s Ohsung Kwon had warned in a report this week that Democrats winning Texas might prove an unusually severe blow for the sector.

Hut 8 Posts Earnings Beat, Revenue Miss; Adds New AI Lease Hut 8 released its third-quarter report before the open Wednesday. Earnings reached 98 cents a share, a swing from the 73-cent loss analysts expected and well above the 43 cents of a year earlier. Revenue of $71.07 million missed the roughly $75.93 million forecast by 6.40% and sat 14.90% below the $83.51 million from a year ago.

Hut 8 also announced a second lease at its Beacon Point campus, this time for 352 megawatts with the same tenant. That lifts the expected value of its contracted AI data center capacity to about $26.6 billion over the base terms. The 1,300 megawatts added to its exclusive pipeline bring that total to 3,180 megawatts, and the company closed on a revolving credit line worth $1.07 billion.

Bitcoin (CRYPTO: BTC) sales funded $250 million of share buybacks, with $175.3 million coming after the quarter ended and $74.7 million before it. The board now allows up to $1.0 billion in total repurchases.

HUT Shares Are Plunging HUT Price Action: Hut 8 shares were down 21.44% at $50.08 at the time of publication on Wednesday.