Some financial assets are more sensitive to political events than others. I propose that Marathon Digital Holdings stock (MARA) is one of the highly sensitive type, so cautious investors are likely immersed in a waiting game while political outcomes are still uncertain in 2024. I am neutral on MARA stock because of an upcoming earnings event. The presidential election will happen at around the same time and could move the share price sharply in either direction. The stock has already been oscillating quite a bit this year.
Based in Florida, Marathon Digital Holdings specializes in mining Bitcoin (BTC-USD) and also holds inventory of Bitcoin. In August, I reported on the “good news, bad news” situation concerning Marathon Digital’s financial performance in the second quarter of 2024. Specifically, Marathon Digital‘s revenue grew 78% year-over-year to $145.1 million, but the company’s net loss widened from $0.07 per share in the year-earlier quarter to $0.72 per share in Q2 of 2024.
This mixed picture presents an uncertain path forward for Marathon Digital Holdings’ shareholders. I expect the feeling of uncertainty to persist until early November for a couple of reasons – one political, and the other financial. Even if you’re a cryptocurrency aficionado, in my view there’s no need to make any hasty investment decisions about MARA stock.
Marathon Digital Seeks Cost-Efficiency and Self-Sufficiency
Earlier this month, Marathon Digital Holdings released its operational data for August. Again, it’s provides a mixed picture of the company’s situation with positive and not-so-positive data points. This supports my neutral thesis because there’s good and bad news to consider from the August operational report. On the other hand, it’s seems encouraging that Marathon Digital seeks to become a more cost-efficient cryptocurrency miner. In August, Marathon Digital Holdings increased its energized hash rate (a measure of throughput rate in cryptocurrency mining) to 35.2 exahashes per second (EH/s), up 11% month-over-month as compared to July.
However, Marathon Digital’s number of produced Bitcoins declined 3% month-over-month to 673 in August. It logically follows, then, that the company’s average number of Bitcoins produced per day also decreased 3% month-over-month. So, there was a mix of positive and negative data in August. However, Marathon Digital Holdings CEO Fred Thiel did announce that the company owned and operated approximately 54% of the 1.1 gigawatts of power in Marathon Digital’s portfolio.
Moreover, Thiel commented, “As we continue to increase the share of owned and operated sites in our fleet, we anticipate continuing to achieve cost savings on a per petahash basis. Our long-term goal is to position MARA as one of the industry’s most cost-efficient operators.” I’d say that self-sufficiency and cost-efficiency are worthwhile goals for Marathon Digital Holdings. However, there needs to be more data, not just talk, to back this up. Thus, Marathon Digital will need to demonstrate further improvement in these areas over time, and this remains to be seen.
Two Near-Term Events Will Impact Marathon Digital
Predicting earnings events and election outcomes is a difficult game to win on a consistent basis. Coincidentally, there are two major events that will affect Marathon Digital Holdings in early November. Since there’s no way to predict the outcomes of these events with 100% certainty, I’m remaining neutral on MARA stock for the time being.
First of all, Marathon Digital Holdings is expected to release its third-quarter 2024 earnings results on November 6. The analysts’ consensus estimate calls for Marathon Digital to report an earnings loss of $0.32 per share. That might not sound like a high bar to clear, but bear in mind that Marathon Digital Holdings lost $0.72 per share in the prior quarter, and this was a wide miss when compared to Wall Street’s estimate. In other words, Marathon Digital needs to demonstrate quarter-over-quarter improvement in order to meet analysts’ consensus forecast.
Literally one day before Marathon Digital Holdings’ upcoming earnings event is the November 5 U.S. presidential election. Former President Donald Trump is widely viewed as the pro-cryptocurrency candidate, while Vice President Kamala Harris’s stance on cryptocurrency is less clear than Trump’s. Geoff Kendrick, global head of digital assets research at Standard Chartered, suggested that, “a Harris victory would likely trigger an initial price decline,” in Bitcoin. Presumably, this would have a negative impact on MARA stock as well.
My point is that it’s unnecessary for investors to be in the business of predicting the outcomes of these two major events in early November. Instead, you can choose to stay on the sidelines for a couple of months and then assess the situation.
Is MARA Stock a Buy, According to Analysts?
On TipRanks, MARA comes in as a Hold based on two Buys, four Holds, and one Sell ratings assigned by analysts in the past three months. The average Marathon Digital Holdings stock price target is $20.67, implying % upside potential.
If you’re wondering which analyst you should follow if you want to buy and sell MARA stock, the most accurate analyst covering the stock (on a one-year timeframe) is Kevin Dede of H.C. Wainwright, with an average return of 49.64% per rating. Click on the image below to learn more.
Conclusion: Should You Consider MARA Stock?
Marathon Digital Holdings recently presented mixed results, both operationally and financially. However, it’s encouraging for investors that Marathon Digital seeks to achieve greater self-sufficiency and cost-efficiency, though this needs to show up in future data releases.
Additionally, the near-term future for Marathon Digital Holdings is clouded by uncertainty in the company’s upcoming earnings event as well as an impactful election outcome. Therefore, I’m choosing not to make any hasty predictions about Marathon Digital and am refraining from buying or selling MARA stock today.
