UK based cryptocurrency miner Argo Blockchain (BRA) saw his share price plunge of 91.67% since the beginning of the year, while cryptocurrency prices fell, reducing the company’s revenue. A £24m funding deal fell through at the end of October.
Will the company survive the turmoil in the crypto market? Is it possible to make gains by buying the drop in ARB’s stock price?
Let’s take a look at the stock’s recent performance and potential long-term outlook.
What is Argo Blockchain?
Argo Blockchain is an enterprise-scale cryptocurrency provider mining and smart contract services. The company aims to provide “accessible” cryptocurrency mining through a subscription service. To limit the environmental impact of mining, Argo is focusing on using renewable electricity to support the growth of blockchain technologies.
The company was founded in 2017 by tech entrepreneur Peter Wall, who serves as its CEO, and Mike Edwards, who served as executive chairman until January 2020 when he left to focus on his role as CEO. of Pioneer Media Holdings.
Argo was listed on the London Stock Exchange in an initial public offering of £25 million (Initial Public Offering) in August 2018, when a cryptocurrency company first publicly listed on the stock exchange. The share was priced at £0.16 per share, giving the company a valuation of £47 million.
In September 2021, Argo listed 75 million American Depositary Shares (ADS) on the Nasdaq Global Market at a price of $15 under the symbol “ARBK”, raising $112.5 million.
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ARB Stock Price Drops in Crypto Bearish Environment
Argo share price fell from its peak of £2.82 in February 2021 when the crypto market rally took off. But while the stock followed the crypto volatility pattern, it did not follow the magnitude of bitcoin (BTC) market gains, with the stock trading as high as £1.73 in September and £1.44 on November 12, after bitcoin traded at an all-time high above $68,000 on November 11th.
Argo announced in July 2021 that it had begun construction of a bitcoin mining facility in Texas. However, the share price came under pressure as investors worried about the cost of the facility. As of August 2021, short seller Boatman Capital warned investors: “We believe that Argo Blockchain has purchased land in Texas apparently up to 100 times more than the acreage is worth, which raises serious governance questions about why this deal was made and who it is benefited.
“We are particularly concerned that nine of the beneficiaries of this transaction appear to be Argo shareholders. We are also concerned that a seemingly unreported multi-million dollar legal dispute between Argo and Celsius Network could threaten future bitcoin mining capacity and revenue. Argo leases approximately 40% of its mining fleet to Celsius.
An insider revealed that the installation could cost between $1.5 billion and $2 billion, which the company later confirmed in a statement November 5.
The stock ended the year at £0.98 and has since been in decline amid the cryptocurrency market turmoil. The share price halved in May 2022 to £0.50, when Argo began mining bitcoins on the Texas site, amid a strong US dollar and the terra luna cryptocurrency crash caused a stir in the markets.
Argo stock fell to £0.30 in mid-June before rallying and recovering towards £0.50 in mid-August when the company reported higher BTC mining revenues and the completion of a machine swap with Core Scientific. The risk environment was also more favorable across all financial markets.
But the stock price fell after Argo announcement a 14% drop in revenue in the first half of the year compared to the first half of 2021 to £26.7 million, “mainly due to a drop in the price of Bitcoin and an increase in the global hashrate and the level of difficulty of the associated network”.
Additionally, the company revised its hashrate capacity forecast to 3.2 PE/s by the end of 2022 and 4.1 PE/s in the first quarter of 2023, noting:
“We have worked closely with ePIC and Intel to modify the machine design to increase overall mining efficiency, which has delayed our planned deployment schedule. Additionally, we are preserving our option in reducing our overall capital expenditure on these machines as market conditions remain volatile. We remain confident in the performance of the custom machines and are excited to deploy them beginning in Q1 2023.”
The share price continued to decline in September and on October 11, Argo reported a decrease in BTC mined in September to 215 bitcoins or bitcoin equivalents from 235 BTC in August. The decrease was primarily due to a 12% increase in the Bitcoin blockchain’s average network difficulty in September, and the company continued to scale back operations at the Texas site during periods of high electricity prices. .
ARB’s share price fell from £0.36 in early October to £0.14 on October 13. While the price rebounded from £0.11 on October 21st to £0.21 on October 26th, it was unable to sustain the gain and fell to a new low of £0.07 on the 2nd. november. The stock has since ranged between £0.07 and £0.08 per share. Cryptocurrency prices came under renewed pressure in November due to the rapid FTX exchange collapse.
On October 7, Argo had announcement plans to sell 3,400 mining machines for cash proceeds of £6m and to raise £24m via a proposed equity offering to a strategic investor. But on October 31, the company declared that the deal had fallen through and that he “continued to explore other funding opportunities”. The company added that it sold 3,843 new mining machines for £4.8 million in cash.
On November 8, Argo announced that its October mining revenue was £3.55 million. This was down 51% from £7.24m in October 2021. Argo mined 204 BTC in October, down from 215 BTC in September, as the difficulty of the Bitcoin network continued to rise.
The lack of funding and declining cash flow raised questions about Argo’s long-term future.
“As Argo explores additional financing opportunities, there can be no assurance that definitive agreements will be signed or transactions will be completed. If Argo were unable to secure additional financing, Argo would become cash flow negative in the near term. and is expected to reduce or cease operations,” the Oct. 31 statement read.
“The Company endeavors to carry out these financing operations in order to provide the Company with sufficient working capital for its current needs, that is to say for at least the next twelve months from the date of this announcement. .”
Where do analysts see stock trading in the future? What do some of the latest Argo Blockchain stock price predictions indicate?
Argo Blockchain Stock Price Prediction: Will the Company Survive in the Long Term?
At the time of writing (21 November) the average 12-month ARB share price forecast from two analysts was £0.0730 per share, with one pricing the stock as ‘bought’ and the another giving it a “neutral” rating, according to invest.com. This would see the share price change little from the current level of £0.075.
The Argo Blockchain stock price prediction by an algorithm based forecaster Investor Portfolio at the time of writing predicted the stock could fall from £0.08939 to £0.0559 in December and then further fall from £0.01 to £0.0000212 in May 2023. Wallet Investor’s Argo Blockchain stock for 2023 indicated that the stock could effectively drop to zero around the middle of the year.
However, Argo Blockchain stock price prediction for 2025 from AI pickup showed the stock rebounding to an average of £6.806, from £0.7553 in 2023.
Meanwhile, according to data compiled by market beat, Nasdaq-listed ARBK stock forecast targets ranged from $8 from HC Wainwright on Aug. 26 to $3 from Barclays on Oct. 10. On Nov. 1, analysts at Jefferies Financial and Canaccord Genuity downgraded the stock from buy to hold, while analysts at Stifel Nicolaus lowered their rating from hold to sell. The ADS price closed at $0.82 on November 18.
The Argo Blockchain stock price prediction of Government capital for the company’s ADS stock estimated that the price could drop to zero as early as December 2022.
If you are looking for an Argo Blockchain stock price prediction to inform your trading strategy, it is important to remember that the high volatility in cryptocurrencies and stock markets makes it difficult for analysts and algorithm-based forecasters to make accurate predictions about the future. of the share price.
We recommend that you always do your own research. Read the latest market trends, news, technical and fundamental analysis and expert opinions before making any investment decisions. Keep in mind that past performance does not guarantee future returns. And never invest money you can’t afford to lose.
Is Argo Blockchain a good stock to buy?
Whether ARB is an appropriate stock for your portfolio depends on your risk tolerance, your trading strategy, and the amount you intend to invest, among other factors. Always be sure to do your own research.
Will Argo Blockchain stock price go up or down?
The direction of ARB’s stock price will likely depend on the price of bitcoin, as well as the company’s ability to generate enough cash to continue operations, among other factors. Keep in mind that past performance is no guarantee of future results.
Should I invest in Argo Blockchain shares?
The decision whether or not to invest in ARB is a decision that only you can make. You should do your own research to get an informed view of the market.
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