Marathon Patent Group, Inc. (MARA) is a digital asset technology company that mines cryptocurrencies with a focus on the blockchain ecosystem and the generation of digital assets.
Bitcoin, the most popular cryptocurrency, has soared exponentially last year and is up more than six-fold since its low in March 2020. Bitcoin prices have been skyrocketing since early October 2020, rising from roughly $11,000 to nearly $42,000 per token in a three-month span. Apart from the health crisis, a weak global economy, a dovish monetary policy stance and weak US dollar enhanced the appeal of bitcoin.
Since reaching a peak on January 8th, bitcoin prices have meandered over the last couple of weeks. However, the correction seems to be short-lived as investors are now considering cryptocurrencies into their asset allocation to hedge against inflation and use it as a store of value, over gold and other precious metals. In fact, it seems likely that bitcoin could even rise above $100,000 in 2021.
In line with the massive spike in the bitcoin prices, the stock has gained 2,387.8% in the past six months. With MARA’s improving financial health and the potential upside based on a number of factors, the stock has earned a “Buy” rating in our proprietary ratings system.
Here is how our proprietary POWR Ratings system evaluates MARA:
Trade Grade: A
MARA is currently trading higher than its 50-day and 200-day moving averages of $8.99 and $3.43, respectively, indicating that the stock is in an uptrend. In fact, the stock’s 927% return over the past three months reflects a solid short-term bullishness.
As a direct beneficiary of this impressive bitcoin rally, MARA was one of the best performing stocks in 2020, with record revenue growth. In the third quarter that ended September 2020, the company delivered revenues of $0.84 million, surging 160% year-over-year. The company generated $650,000 in Bitcoin revenue, the largest quarterly Bitcoin revenue in MARA’s history. Though the company reported a loss of $0.06 per share, it marked a significant improvement from the year-ago loss of $0.12 per share.
Moreover, MARA has recently entered into a non-binding memorandum of understanding with DMG Blockchain Solutions Inc. to form Digital Currency Miners of North America (DCMNA), which will be a U.S.-based non-profit entity and launch North America’s first cooperative mining pool.
Buy & Hold Grade: C
In terms of proximity to its 52-week high, which is a key factor that our Buy & Hold Grade takes into account, MARA is not positioned well. The stock is currently trading 21.1% below its 52-week high of $28.37.
Looking at the past three years, the stock has gained merely 34.2%. Moreover, its top-line and total assets have grown at a CAGR of 36.3% and 43.5%, respectively, during the same period. However, the company is still not profitable.
MARA has recently closed its registered direct offering of common stock offering worth $250 million. The company also completed a $200 million shelf offering by utilizing its at-the-market (ATM) facility earlier this month. MARA intends to utilize the funds from this recent capital raise to pay for the miners it has purchased from Bitmain and to further grow the business.
In line with the progress, MARA entered into a contract with Bitmain in December to purchase 70,000 Antminer S-19 ASIC miners, to be deployed in July 2021, and an additional 10,000 S-19J pro ASIC miners, to be delivered in August this year. Once all miners are fully deployed, the Company’s mining fleet will consist of more than 103,000 miners capable of producing a hashrate of 10.36 EH/s.
Peer Grade: A
MARA is currently ranked #48 out of 254 stocks in the Financial Services (Enterprise) group. Other popular stocks in this group are Grayscale Bitcoin Trust (GBTC), EVO Payments, Inc. (EVOP) and Repay Holdings Corp. (RPAY). While GBTC has gained 195.7% in the past three months, EVOP and RPAY have returned 14.1% and 2.3%, respectively, over this period.
Industry Rank: B
MARA is part of the StockNews.com Financial Services (Enterprise) industry, which is ranked #49 out of the 123 industries. The companies in this industry provide technology-based information processing and servicing solutions to companies operating within the financial services industry. Since the onset of the pandemic, the industry has witnessed an accelerated growth in demand due to the work-and-learn from home trend. Given the benefits of businesses depending more on technology, the industry should keep growing this year as well.
Overall POWR Rating: B (Buy)
Overall, MARA is rated a “Buy” due to its impressive past performance, expansion strategies, wider cryptocurrency adoption among both institutional and retail investors, and solid price momentum, as determined by the four components of our overall POWR Ratings.
Bitcoin price has been on a massive upswing since the onset of the pandemic and experts believe that the cryptocurrency bull-run is far from over, given the continued weakness in the global economy. Some experts even believe that crypto will have the same impact on money that the internet has had on information. Consequently, MARA is investing heavily in expanding its crypto mining business by purchasing and deploying new mining equipment to ensure its share of the bitcoin network, and rapidly increase hash rate.
According to Markets and Markets, the cryptocurrency market is projected to grow at a CAGR of 6.18% to $1.40 billion by 2024. Innovating technologies such as growth of Decentralized Finance (DeFi), blockchain, and quantum computing are shaping a new trajectory for the future of bitcoin mining. Leading digital payments platforms like Paypal (PYPL) and Square (SQ) are now supporting cryptocurrencies as trading and payment options. This has further enhanced the confidence of investors in Bitcoin. Moreover, CNBC Bitcoin investor Mike Novogratz even believes that every central bank would issue a digital currency within the next five years.
Bitcoin is not in a bubble yet, and MARA is well-poised to follow bitcoin’s resurgence. Analyst sentiment, which gives a good sense of a stock’s future price movement, is pretty impressive for MARA. Average broker rating of 1.5 indicates a favorable analyst sentiment. Moreover, analysts expect the company’s current year revenue and EPS to surge 3,563.6% and 678.9%, year-over-year, respectively. This outlook might keep MARA’s price momentum alive.
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MARA shares were trading at $22.30 per share on Tuesday morning, down $0.09 (-0.40%). Year-to-date, MARA has gained 113.60%, versus a 1.03% rise in the benchmark S&P 500 index during the same period.
About the Author: Sidharath Gupta
Sidharath’s passion for the markets and his love of words guided him to becoming a financial journalist. He began his career as an Equity Analyst, researching stocks and preparing in-depth research reports. Sidharath is currently pursuing the CFA program to deepen his knowledge of financial anlaysis and investment strategies. More...
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