After a solid bull run last year, the crypto market witnessed a massive sell-off this year on concerns over macroeconomic and geopolitical headwinds. With many experts expecting the crypto market to witness further pressure, it could be wise to avoid fundamentally weak crypto stocks Marathon Digital (MARA) and Riot Blockchain (RIOT). Read on….
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The stock market has faced relentless selling since the beginning of the year due to concerns over aggressive interest rate hikes by the Federal Reserve to tame the surging inflation and the possibility of a recession. The crypto market has fared even worse, with the most popular cryptocurrencies, Bitcoin and Ethereum, falling more than 55% year-to-date.
Many experts believe that we are in the midst of a “crypto winter,” which means a prolonged bear market in the crypto space. DBX Digital Ecosystem’s CEO Igor Zakharov said, “The crypto market was already feeling the effect of world events, especially the Russia-Ukraine conflict that caused turmoil in global finance.”
“By the time TerraUSD and Luna collapsed and set in motion a domino effect in the crypto world, crypto winter had already begun,” he added. Investors’ bearish stance on crypto is evident from the ProShares Bitcoin Strategy ETF’s (BITO) 56.8% decline year-to-date.
With the stock and crypto markets expected to remain under pressure due to the Fed’s aggressive interest rate hikes, we think it could be wise to avoid fundamentally weak crypto stocks Marathon Digital Holdings, Inc. (MARA) and Riot Blockchain, Inc. (RIOT).
Marathon Digital Holdings, Inc. (MARA)
MARA is a digital asset technology company focused primarily on mining cryptocurrencies in the blockchain ecosystem and operates as a digital asset generator in the U.S.
MARA’s revenues declined 15% year-over-year to $24.92 million for the second quarter ended June 30, 2022. Its operating loss widened 61.6% year-over-year to $178.21 million. The company’s net loss widened 76% year-over-year to $191.65 million. Also, its loss per share widened by 60.5% year-over-year to $1.75.
Analysts expect MARA’s loss per share for the current quarter is expected to widen 81.8% year-over-year to $0.40. Its revenue for the quarter ending September 30, 2022, is expected to decline 41.3% year-over-year to $30.34 million. It failed to surpass the consensus EPS estimates in each of the trailing four quarters. The stock has fallen 64% over the past year to close the last trading session at $12.82.
MARA’s POWR Ratings reflect this bleak outlook. The stock has an overall F rating, equating to a Strong Sell in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
It has an F grade for Growth, Value, Stability, Sentiment, and Quality. To see the rating of MARA for Momentum, click here.
Riot Blockchain, Inc. (RIOT)
RIOT is involved in cryptocurrency mining and the overall blockchain system through various investments. The company has deployed approximately 8,000 application-specific integrated circuit miners at its cryptocurrency mining facility in Oklahoma. In addition, its subsidiary Tess Inc. seeks to develop a blockchain-based escrow service for wholesale telecom carriers.
For the fiscal second quarter ended June 30, 2022, RIOT’s net loss came in at $366.33 million, compared to a net income of $19.33 million. Its adjusted EBITDA loss came in at $65.17 million, compared to an adjusted EBITDA of $2.38 million. The company’s adjusted loss per share came in at $0.50, compared to an adjusted EPS of $0.03.
For the current quarter, RIOT’s EPS is expected to remain negative. It failed to surpass Street EPS estimates in three of the trailing four quarters. Over the past year, the stock has lost 74% to close the last trading session at $7.63.
RIOT’s weak prospects are reflected in its POWR Ratings. It has an overall F rating, equating to a Strong Sell in our proprietary rating system.
It has an F grade for Stability, Sentiment, and Quality and a D for Value. It is ranked #80 out of 81 stocks in the Technology – Services industry. Click here to see the other ratings of RIOT for Growth and Momentum.
MARA shares were trading at $12.51 per share on Wednesday morning, down $0.31 (-2.42%). Year-to-date, MARA has declined -61.93%, versus a -16.59% rise in the benchmark S&P 500 index during the same period.
About the Author: Dipanjan Banchur
Since he was in grade school, Dipanjan was interested in the stock market. This led to him obtaining a master’s degree in Finance and Accounting. Currently, as an investment analyst and financial journalist, Dipanjan has a strong interest in reading and analyzing emerging trends in financial markets.
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