The stock market has been under considerable pressure since the beginning of the year due to macroeconomic and geopolitical concerns. Inflation reached its highest level in more than 40 years, and the U.S. economy contracted for two consecutive quarters.
In its efforts to control decades-high inflation, the Federal Reserve has maintained its hawkish stance by increasing the benchmark interest rate four times this year. However, inflation still remains high, with the August consumer price index (CPI) rising 8.3% year-over-year. The stubbornly high inflation will likely prompt the Fed to continue aggressive interest rate hikes.
The persistent monetary policy tightening will likely keep the stock market under pressure in the upcoming months. Therefore, it could be wise for investors holding fundamentally weak stocks, Roblox Corporation (RBLX) and Marathon Digital Holdings, Inc. (MARA), to sell them before they fall further.
Roblox Corporation (RBLX)
RBLX develops and operates an online entertainment platform. The company offers Roblox Studio, Roblox Client, Roblox Education, and Roblox Cloud.
RBLX’s loss from operations widened 19.1% year-over-year to $170.27 million for the second quarter ended June 30, 2022. The company’s net loss widened 25.9% year-over-year to $176.44 million. In addition, its adjusted EBITDA declined 69.7% year-over-year to $54.64 million.
RBLX’s forward EV/S of 7.51x is 285.7% higher than the industry average of 1.95x. Its forward P/S of 7.95x is 559.2% higher than the industry average of 1.21x.
Analysts expect RBLX’s loss per share to widen 115.4% year-over-year to $0.28. It has missed Street EPS estimates in three of the trailing four quarters. The stock has lost 64.7% year-to-date to close the last trading session at $36.41.
RBLX’s POWR Ratings reflect its poor prospects. It has an overall grade of F, which indicates a Strong Sell. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
It has an F grade for Stability and a D for Growth, Value, Momentum, and Sentiment. It is ranked last out of 22 stocks in the Entertainment – Toys & Video Games industry. Click here to see RBLX’s rating for Quality.
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 revenues declined 15% year-over-year to $24.92 million for the second quarter ended June 30, 2022. Its operating loss widened 61.6% year-over-year to $178.21 million. The company’s net loss widened 76% year-over-year to $191.65 million. Also, its loss per share widened by 60.5% year-over-year to $1.75.
MARA’s forward EV/S of 11.15x is 337.8% higher than the industry average of 2.55x, while its forward P/S of 6.86x is 172.7% higher than the industry average of 2.51x.
Analysts expect MARA’s loss per share for the current quarter is expected to widen 81.8% year-over-year to $0.40. Its revenue for the quarter ending September 30, 2022, is expected to decline 44% year-over-year to $28.95 million.
It failed to surpass the consensus EPS estimates in each of the trailing four quarters. Over the past year, the stock has fallen 69.7% to close the last trading session at $10.26.
MARA’s POWR Ratings reflect this bleak outlook. It has an overall F rating, which translates to a Strong Sell in our proprietary rating system.
It has an F grade for Growth, Value, Stability, Sentiment, and Quality. To see the rating of MARA for Momentum, click here.
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RBLX shares were trading at $37.03 per share on Wednesday morning, up $0.62 (+1.70%). Year-to-date, RBLX has declined -64.10%, versus a -17.66% rise in the benchmark S&P 500 index during the same period.
About the Author: Dipanjan Banchur
Since he was in grade school, Dipanjan was interested in the stock market. This led to him obtaining a master’s degree in Finance and Accounting. Currently, as an investment analyst and financial journalist, Dipanjan has a strong interest in reading and analyzing emerging trends in financial markets. More...
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