After a strong bull run last year, the crypto market saw a massive sell-off this year due to concerns over macroeconomic and geopolitical headwinds. With many experts expecting the crypto market to come under further pressure, it might be wise to avoid fundamentally weak crypto stocks Marathon Digital (MARA) and Riot Blockchain (RIOT). Continue reading….
The stock market has faced relentless selling since the start of the year on concerns over aggressive interest rate hikes by the Federal Reserve to tame soaring inflation and the possibility of a recession. . The crypto market has gotten even worse, with the most popular cryptocurrencies, Bitcoin and Ethereum, down over 55% year-to-date.
Many experts believe that we are in the midst of a “crypto winter”, meaning an extended bear market in the crypto space. DBX Digital Ecosystem CEO Igor Zakharov said, “The crypto market was already feeling the effect of global events, especially the Russian-Ukrainian conflict which caused turmoil in global finance.”
“By the time TerraUSD and Luna crashed and triggered a domino effect in the crypto world, crypto winter had already begun,” he added. The bearish stance of crypto investors is evident in ProShares Bitcoin Strategy ETFs (BITO) Down 56.8% since the beginning of the year.
With the stock and crypto markets expected to remain under pressure due to the Fed’s aggressive interest rate hikes, we think it might be a good idea 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 United States.
MARA’s revenue decreased 15% year over year to $24.92 million for the second quarter ended June 30, 2022. operating loss grew 61.6% year over year to $178.21 million. The company’s net loss rose 76% year over year to $191.65 million. Additionally, its loss per share widened 60.5% year-over-year to $1.75.
Analysts expect MARA’s loss per share for the current quarter to increase 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 has failed to beat consensus EPS estimates in each of the past four quarters. The stock has fallen 64% over the past year to close last trading session at $12.82.
MARA POWR Rankings reflect these bleak outlooks. The stock has an overall F rating, which equates to a strong sell in our proprietary rating system. POWR ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
It has an F rating for Growth, Value, Stability, Sentiment and Quality. To see MARA’s rating 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 IC miners at its cryptocurrency mining facility in Oklahoma. Additionally, its subsidiary Tess Inc. is looking to develop a blockchain-based escrow service for wholesale telecom carriers.
For the second fiscal quarter ended June 30, 2022, RIOT’s net loss was $366.33 million, compared to net profit of $19.33 million. Its adjusted EBITDA loss was $65.17 million, compared to an adjusted EBITDA of $2.38 million. The company’s adjusted loss per share was $0.50, compared to adjusted EPS of $0.03.
For the current quarter, RIOT’s EPS is expected to remain negative. It has failed to beat Street EPS estimates in three of the past four quarters. Over the past year, the stock has lost 74% to close the last trading session at $7.63.
RIOT’s weak outlook is reflected in its POWR ratings. It has an overall F rating, which equates to a strong sell in our proprietary rating system.
It has an F rating for stability, feeling and quality and a D for value. It is ranked No. 80 out of 81 stocks in the Technology – Services industry. Click here to see RIOT’s other ratings 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 is down -61.93%, compared to a -16.59% rise in the benchmark S&P 500 over the same period.
About the Author: Dipanjan Banchur
Ever since he was in elementary school, Dipanjan had been interested in the stock market. This enabled him to obtain a master’s degree in finance and accounting. Currently, as an investment analyst and financial journalist, Dipanjan is particularly interested in reading and analyzing emerging trends in financial markets.
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