Is this crypto stock a buy after dropping nearly 80% this year?
Marathon Digital Holdings Inc (NASDAQ:MARA) is a digital asset technology company that mines bitcoin with a focus on the blockchain ecosystem and the generation of digital assets. On June 9, Marathon Digital released its bitcoin production and mining operation updates for May 2022. The crypto miner reported that its total bitcoin holdings increased to 9,941 last month and its miners installed and awaiting energization increased to 19,000.
The security is feeling the weight of the cryptocurrency selloff, and was last seen down 9.9% to trade at $6.79. The stock has lost almost 80% this year, and is trading at its lowest level since December 2020 today. Pressure at the 20-day moving average has been pushing the equity lower since early April.
Short sellers have been targeting MARA, with short interest up 23.5% in the last two reporting periods to make up 24% of the stock's available float. It is worth noting, however, that the stock has landed on the Short Sale Restricted (SSR) list today.
As a result, Marathon Digital stock now trades at a forward price-earnings ratio of 9.53 and a price-sales ratio of 5.14, which are both extremely attractive values for the level of growth the business is expected to generate in the coming years. Average estimates have MARA's earnings coming in at $0.52 for fiscal 2023. This would signal a shift to profitability. In addition, Marathon Digital Holdings is expected to produce $378.88 million in revenues for fiscal 2023, which would mark a 151.8% increase compared to fiscal 2021.
The bitcoin mining company currently owes $730.71 million in total debt. MARA also holds just $336.75 million in cash on their balance sheet, adding yet another risk factor for the business. In general, Marathon Digital stock continues to be an extremely risky speculative play, largely due to the volatile nature of cryptocurrency making long-term estimates incredibly unreliable. Nonetheless, the upside potential for MARA could be massive at its current valuation if the company executes on even a fraction of its expectations.