Is Now a Good Time to Buy Crypto-Mining Stocks Marathon Digital?

Over the past week, Bitcoin and other cryptocurrency prices have crashed, wiping out $1.4 trillion in value from the combined crypto market. Bitcoin prices fell below $33,000 per bitcoin this week, more than 50% below its November peak. The second-largest cryptocurrency by value, Ethereum, crashed to $2,300 per ether, down from almost $5,000 late last year.

Furthermore, the Biden administration is reportedly working on an executive order that emphasizes the potential economic, regulatory, and national security challenges prospectively posed by cryptocurrencies. While Bitcoin’s hash rate, which refers to the measure of computational power per second used when mining, is above 175 exahash per second and recently reached an all-time high, the mining industry could be slowed by the global shortage of semiconductor chips.

MARA, which is headquartered in Las Vegas, is a digital asset technology company that is focused primarily on mining cryptocurrencies on the blockchain ecosystem and operates as a digital asset generator in the United States.

On December 31, Bernstein Liebhard LLP announced that a securities class action lawsuit had been filed against MARA on behalf of investors who purchased or acquired securities of the company. The lawsuit alleges that MARA failed to disclose material adverse facts about the company’s business, operations, and prospects, particularly about the Beowulf Joint Venture that was subjected to a heightened risk of regulatory scrutiny, and implications of potential regulatory violations. The company is also facing class-action lawsuits from other law firms.

For its fiscal third quarter, ended September 30, MARA’s loss from operations increased 3,123.5% year-over-year to $64.28 million. Its loss before income taxes rose 1,011.7% from the prior-year quarter to $22.17 million. And its total operating expenses climbed 3,999.5% from the same period last year to $115.99 million.

The $0.52 consensus EPS estimate for the quarter ending March 2022indicates a 40.2% year-over-year decrease.

The stock has declined 26.8% in price over the past six months and 49.8% over the past month to close yesterday’s trading session at $19.79.

MARA’s POWR Ratings reflect this bleak outlook. The stock has an overall F rating, which equates to a Strong Sell in our proprietary rating system. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.

MARA has a Value, Stability, and Quality and a Sentiment grade of D. In the 119-stock Financial Services (Enterprise) industry, it is ranked #117. The industry is rated D. Click here to see the additional POWR Ratings for MARA (Growth and Momentum).

By Anushka Dutta