There Is No Reason for Long-Term Investors to Buy This Stock

NASDAQ: MARA | Marathon Digital Holdings Inc. News, Ratings, and Charts

MARA – Marathon Digital’s (MARA) bleak financial performance is concerning. Moreover, given its poor profit margins and lofty valuation, I think long-term investors should steer clear of this stock. Keep reading….

Marathon Digital Holdings, Inc. (MARA) operates as a digital asset technology company that mines cryptocurrencies with a focus on the blockchain ecosystem and the generation of digital assets in the United States. As of June 30, 2022, the company had approximately 10,055 bitcoins.

On August 1, 2022, MARA expanded its credit facilities with Silvergate Bank, the leading provider of financial infrastructure solutions to the digital currency sector.

Hugh Gallagher, MARA’s CFO, said, “We are pleased to be closing on these debt facilities and believe that the combination of a term loan and revolver provides Marathon with exceptional flexibility as to our funding options.”

Over the past month, MARA has lost 35.3% to close the last trading session at $10.45. It has lost 66.8% year-to-date and 70% over the past year.

Here is what could shape MARA’s performance in the near term:

Weak Financials

For the second quarter ended June 30, 2022, MARA’s revenues came in at $24.92 million, down 15% year-over-year. Its operating loss came in at $178.21 million, up 61.6% year-over-year. Moreover, its net loss came in at $191.65 million, up 76% year-over-year.

Its negative adjusted EBITDA came in at $147.20 million compared to a negative $105.07 million in the year-ago period.

Stretched Valuations

In terms of its forward EV/S, MARA’s 11.19x is 331.9% higher than the industry average of 2.59x. Its forward EV/EBITDA of 34.60x is 185.1% higher than the industry average of 12.14x. Also, its forward P/S of 7.30x is 188.5% higher than the industry average of 2.53x.

Poor Profit Margins

MARA’s trailing-12-month negative gross profit margin of 17.40% is lower than the industry average of 50.35%. Its trailing-12-month EBITDA margin of negative 83.53% and trailing-12-month negative net income margin of 114.11% are lower than the industry averages of 12.98% and 4.25%.

Furthermore, MARA’s trailing-12-month ROCE, ROTC, and ROTA of negative 34.72%, 12.92%, and 14.26%, are lower than the industry averages of 7.11%, 3.96%, and 2.74%, respectively.

POWR Ratings Reflect Bleak Prospects

MARA has an overall rating of F, equating to Strong Sell in our proprietary POWR Ratings system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.

MARA has an F grade for Value and Quality, consistent with its higher-than-industry valuation multiples and lower-than-industry profit margins, respectively. In addition, it has an F grade for Stability, in sync with its beta of 5.33.

Click here for the additional POWR Ratings for MARA (Growth, Momentum, and Sentiment).

View all the top stocks in the Financial Services (Enterprise) industry here.

Bottom Line

MARA has demonstrated weak bottom-line performance. Moreover, analysts expect its EPS to decline 586.1% year-over-year to negative $2.47 in 2022. Also, it missed EPS estimates in all four trailing quarters. Given the stock’s bleak fundamentals, I think long-term investors should avoid MARA.

How Does Marathon Digital Holdings, Inc. (MARA) Stack Up Against its Peers?

While MARA has an overall POWR Rating of F, one might consider looking at its industry peers, Forrester Research, Inc. (FORR), which has an overall A (Strong Buy) rating, and Consumer Portfolio Services, Inc. (CPSS), WNS (Holdings) Limited (WNS), and Federal Agricultural Mortgage Corporation (AGM), which have an overall B (Buy) rating.

MARA shares were trading at $10.87 per share on Monday afternoon, down $0.05 (-0.46%). Year-to-date, MARA has declined -66.92%, versus a -17.60% rise in the benchmark S&P 500 index during the same period.

About the Author: Riddhima Chakraborty

Riddhima is a financial journalist with a passion for analyzing financial instruments. With a master's degree in economics, she helps investors make informed investment decisions through her insightful commentaries. More...

More Resources for the Stocks in this Article

TickerPOWR RatingIndustry RankRank in Industry
MARAGet RatingGet RatingGet Rating
FORRGet RatingGet RatingGet Rating
CPSSGet RatingGet RatingGet Rating
WNSGet RatingGet RatingGet Rating
AGMGet RatingGet RatingGet Rating

Most Popular Stories on

Is This REALLY a Bull Market?

The S&P 500 (SPY) keeps making record highs...but does that mean that market conditions are truly bullish? 44 year investment veteran shines a light on how hollow recent gains are as they are only accruing to a handful of stocks with most investors searching high and low for stock market gains. Read on for more...

Unveiling Adobe (ADBE) Q2 Earnings: What Lies Ahead for Investors?

Software giant Adobe Inc. (ADBE) has released its second-quarter earnings, revealing double-digit growth in both revenue and profits. Yet, concerns arise around the complexities of navigating growth in the face of advancing AI technologies. Let’s analyze ADBE’s recent performance and assess key fundamentals to uncover what lies ahead for investors…

3 AI Stocks to Invest in for the Next Technological Revolution

The AI market is experiencing a significant growth trajectory, driven by widespread application across various industries. Hence, it could be wise to invest in top AI stocks, Alphabet (GOOGL), Meta Platforms (META), and Alibaba Group Holding (BABA) for the next technological revolution. Read more...

Analyzing Broadcom’s (AVGO) Q2 Earnings: Worth Investing?

Driven by a surge in demand for its AI products, Broadcom (AVGO) reported robust earnings in its latest quarterly results, exceeding expectations on both top and bottom lines. However, is the stock’s recent announcement of a 10-for-1 stock split worth investing in? Keep reading to find out…

Bullish or Bearish Stock Set Up?

The S&P 500 (SPY) record highs sounds pretty darn bullish on the surface. Yet as we dig below the surface there are some curious signals that point more Risk Off. This is especially true as we come into the next Fed meeting after a round of data that points to inflation still being too high...only further delaying the first rate cut. What does this all mean for stocks from here? Steve Reitmeister offers his latest views on the market outlook along with a preview of his top picks to stay on step ahead of the market. Read on for more...

Read More Stories

More Marathon Digital Holdings Inc. (MARA) News View All

Event/Date Symbol News Detail Start Price End Price Change POWR Rating
Loading, please wait...
View All MARA News