Marathon Digital Still in the Crypto Stock Race

Investors have been increasingly viewing cryptocurrency-related stocks as an attractive investment theme. While cryptocurrencies are decentralized, investing in crypto stocks is a centralized way of exposure to the crypto space. Read More... The post Marathon Digital Still in the Crypto Stock Race appeared first on TipRanks Financial Blog.

Marathon Digital Still in the Crypto Stock Race

Investors have been increasingly viewing cryptocurrency-related stocks as an attractive investment theme. While cryptocurrencies are decentralized, investing in crypto stocks is a centralized way of exposure to the crypto space.

The long-term outlook seems attractive for cryptocurrency stocks, and one player in particular that deserves a mention is Marathon Digital (MARA). At the beginning of the year, MARA stock was trading at $10.40. As Bitcoin surged, the stock touched a high of $56.60.

Since then, profit booking and some correction in Bitcoin has taken the stock lower to current levels of around $23. As such, it seems that Marathon Digital stock is undervalued.

It is important to understand that as a Bitcoin miner, the company’s prospects depend on the price trend for the cryptocurrency.

Amid intermediate corrections, it seems probable that Bitcoin will remain in an uptrend. Reasons for this include the wider adoption of the cryptocurrency and the limited supply of 21 million Bitcoins.

For Q1 2021, Coinbase reported $215 billion in trading volume and $122 billion in assets on platform from over 8,000 institutional customers. Its retail trade volume in the period was 120 billion. This is an indication of the broad-based adoption of the cryptocurrency from retail as well as institutional investors.

That bodes well for Marathon Digital, and thus, the company is well positioned to benefit if Bitcoin prices surge. (See Marathon Digital stock analysis on TipRanks)

Heralding Strong Growth in Revenue

Over the next two years, Marathon Digital is positioned for strong revenue and cash flow growth.

Putting things into perspective, the company had 6,800 active miners as of Q1 2021. For the same period, the company minted 192 new Bitcoins.

If the company’s expansion plan remains on track, Marathon Digital expects to have 103,120 miners by Q1 2022. With this mining capacity, the company expects to produce 55 to 60 Bitcoins per day.

Further, at a Bitcoin price of $55,000, the company will deliver $94.4 million in monthly revenue, which would imply an annual revenue potential of $1.1 billion.

Marathon Digital stock currently has a market capitalization of $1.9 billion. Therefore, the stock is trading at less than two times FY2022 revenue potential, indicative of an undervaluation.

It’s also worth noting that the company reported cash and equivalents of $204.4 million as of Q1 2021. In addition, if Bitcoin holdings are included, the company has a total liquidity buffer of $503.2 million. This gives ample financial flexibility for growth.

Another point to note is that Marathon Digital expects to mine Bitcoin at an average price of $4,541/BTC. Once 103,120 miners are active, the company is positioned to deliver strong EBITDA and cash flows.

Considering the current cash buffer and the future cash flow potential, it seems very likely that Marathon will diversify beyond just Bitcoin mining.

Within the cryptocurrency space, there are ample growth opportunities. For example, billionaire Mark Cuban believes that the growth of DeFi (decentralized finance) can be compared to the early days of the internet.

It’s not long ago that the company was re-branded as Marathon Digital Holdings. The idea was to reflect its position as a leading digital asset technology company. The re-branding seems like a first step towards creating a diversified organization in the next few years.

Wall Street’s Take

According to TipRanks’ analyst rating consensus, MARA stock comes in as a Moderate Buy, with 1 Buy assigned in the last three months.

As for price targets, the average analyst price target is $50 per share, implying around 116.64% upside potential from current levels.

Concluding Views

Marathon already has a partnership with Beowulf for access to low-cost electricity. That makes headwinds to the current expansion plans over the next few quarters unlikely.

Further, Bitcoin can potentially remain above $50,000 in the next few quarters. Inflation has been accelerating in the United States and the cryptocurrency is also being viewed as a good inflation hedge. Additionally, the stock is likely to trend higher once revenue growth is associated with an improvement in EBITDA margin and cash flows. All of these factors add up to a promising future for Bitcoin.

Disclosure: On the date of publication, Faisal Humayun did not have, either directly or indirectly, any positions in the securities mentioned in this article.

Disclaimer: The information contained herein is for informational purposes only. Nothing in this article should be taken as a solicitation to purchase or sell securities.

The post Marathon Digital Still in the Crypto Stock Race appeared first on TipRanks Financial Blog.

Source : Tip Ranks More   

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Palantir Stock: This One Could Require Some Patience

Palantir Technologies (PLTR), which is a top provider of analytics and AI (artificial intelligence) services and technology, saw its stock drop ten days in a row prior its earnings report Read More... The post Palantir Stock: This One Could Require Some Patience appeared first on TipRanks Financial Blog.

Palantir Stock: This One Could Require Some Patience

Palantir Technologies (), which is a top provider of analytics and AI (artificial intelligence) services and technology, saw its stock drop ten days in a row prior its earnings report this past week.

Of course, this is nothing new for high-growth stocks lately. Wall Street has been dumping most of these securities.

Palantir stock did get some relief when it reported its Q1 results on May 11. On the news, shares jumped nearly 10% to $20.21. 

Yet it was not able to hold on, and the stock price has since sunk to around $20, bringing the market capitalization to $37 billion.

Q1 Results

So, let’s get a rundown on the Q1 numbers. The company reported a net loss of $123 million or 7 cents a share. On an adjusted basis, the earnings per share was 4 cents, which was in-line with the consensus forecast. 

As for revenues, they soared 49% to $341.2 million, which handily beat the Street estimate of $332 million. The biggest driver was the U.S. government business, which saw an 83% spike. (See Palantir Technologies stock analysis on TipRanks)

Note that when Palantir was founded – back in 2003 – the focus was generally on contracts for the CIA and the Defense Department. However, over the past decade, the company has been moving more aggressively into the commercial sector. In Q1, commercial segment revenues were $133 million.

Something else to consider about the quarterly results: Palantir said that it will accept Bitcoin from its customers and might even add this digital asset to its balance. As seen recently with Tesla (), this may prove to be a challenge. Tesla recently indicated it will no longer accept Bitcoin for orders because of concerns about the environmental impact of the digital mining.

Palantir's Technological Advantage

Palantir generally caters to larger enterprise customers, as the average revenue per customer is about $8.1 million. In fact, the top 20 customers are at a hefty $36.1 million.

Additionally, the company has been able to scale its operations with proprietary technologies. The latest offering is Apollo for Edge AI. Launched in April, it is already getting traction. At the heart of this system is micro models, which are similar to microservices that allow for modern cloud computing. The technology essentially makes it much easier and more effective to deploy AI models across complex environments. 

This technology holds enormous potential. For example, it can allow for the automation of factories, the use of sensors on oil rigs or even applications in space. All in all, Apollo for Edge AI should expand the company’s addressable market opportunity.  

Wall Street’s Take

Turning to the analyst community, the consensus rating is a Hold, with 2 Buys, 3 Holds and 4 Sells logged over the past three months. The average analyst price target is $21.75, which implies 8.3% upside potential.

Bottom Line on Palantir

Palantir has built a powerful platform and is positioned to benefit from the secular trend of AI. Few companies have a similar level of experience, set of strong technologies and team of data scientists.  

On the other hand, in today’s environment, Wall Street is not particularly interested in growth plays – especially those with high valuations. Consider that Palantir is trading at about 17 times sales, even with the recent drop-off in the stock price.

Therefore, it may be best to hold off and wait for things to settle before making a purchase.

Disclosure: Tom Taulli does not have a long or short position in Palantir stock.

Disclaimer: The information contained herein is for informational purposes only. Nothing in this article should be taken as a solicitation to purchase or sell securities.

The post Palantir Stock: This One Could Require Some Patience appeared first on TipRanks Financial Blog.

Source : Tip Ranks More   

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