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Argo Blockchain Plc Adr (ARBK)
:ARBK
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Argo Blockchain
(NASDAQ:ARBK)
37Underperform
Positive Factors
Debt Elimination
Argo made solid capital structure headway in eliminating all debt owed to Galaxy Digital.
New Revenue Streams
Argo plans to transform Baie Comeau into a hub for high-performance computing services, targeting new revenue streams in AI and data processing.
Negative Factors
Capacity Reduction
The hosting agreement for Helios is ending in December 2024, which will significantly reduce Argo's hash rate capacity.
Debt and Mining Environment
Argo is faced with negotiating a few issues, including balancing capital allocation in a return to growth and managing the $40M debt due.
Revenue Decline
Argo's 3Q24 revenues decreased to $7.5M from $12.4M in 2Q24, and the number of bitcoins mined also dropped from 157 to 123.
Argo Blockchain (ARBK) vs. S&P 500 (SPY)
Market Cap
$31.32M
Dividend YieldN/A
Average Volume (3M)3.06M
Price to Earnings (P/E)―
Beta (1Y)0.67
Revenue GrowthN/A
EPS GrowthN/A
CountryUS
Employees30
SectorFinancial
Sector Strength77
IndustryCapital Markets
Share Statistics
EPS (TTM)-0.84
Shares Outstanding71,725,040
10 Day Avg. Volume7,985,219
30 Day Avg. Volume3,062,901
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)0.47
Price to Cash Flow (P/CF)4.20
P/FCF Ratio8.60
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$0.25Price Target Upside-35.90% Downside
Rating ConsensusModerate Sell
Number of Analyst Covering1
Argo Blockchain Business Overview & Revenue Model
Company DescriptionArgo Blockchain (ARBK) is a publicly traded cryptocurrency mining company based in the United Kingdom. The company specializes in mining operations that focus primarily on Bitcoin, leveraging state-of-the-art computing infrastructure to solve complex cryptographic problems. Argo Blockchain operates data centers equipped with high-performance mining hardware in locations that offer cost-efficient electricity and optimal environmental conditions.
How the Company Makes MoneyArgo Blockchain makes money through its cryptocurrency mining operations, primarily focusing on Bitcoin. The company generates revenue by using its computational power to validate transactions on the Bitcoin network, earning Bitcoin as a reward for successfully adding new blocks to the blockchain. These mined Bitcoins can be held on the company's balance sheet or sold on the market for fiat currency, depending on market conditions and company strategy. In addition to mining, Argo may participate in strategic partnerships or investments within the cryptocurrency and blockchain sectors that could provide additional revenue streams. The company's earnings are influenced by factors such as the price of Bitcoin, mining difficulty, and operational efficiency, including energy costs and hardware performance.
Argo Blockchain Financial Statement Overview
Summary
Argo Blockchain faces significant financial challenges, with profitability and solvency under pressure. The income statement shows declining revenues and persistent losses, the balance sheet reveals negative equity and high debt levels, while cash flow indicates some operational resilience with positive free cash flow. Overall, the company must address profitability and leverage to improve its financial health.Income Statement
Argo Blockchain's income statement reveals significant challenges. The TTM shows a negative net profit margin of -85.97%, indicating substantial losses relative to revenue. Revenue has declined from 2023 to TTM, with a growth rate of -23.65%. Both EBIT and EBITDA margins are negative, highlighting operational inefficiencies and costs exceeding revenues.35
Negative
Balance Sheet
The balance sheet reflects a precarious financial position. The TTM debt-to-equity ratio is not applicable due to negative equity, suggesting insolvency risks. Total liabilities exceed total assets, leading to negative equity, while return on equity is unmeasurable. The equity ratio is negative, indicating that liabilities exceed the company's assets, posing financial stability concerns.25
Negative
Cash Flow
Cash flow analysis shows some resilience despite financial challenges. The TTM free cash flow is positive and has grown by 163.77% from the previous year, indicating improved cash management. The operating cash flow to net income ratio is positive at -0.14, suggesting that operational cash generation is more stable than reported earnings.50
Neutral
| Breakdown | |||||
| TTM | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 | Dec 2019 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 55.71M | 72.96M | 47.36M | 100.15M | 25.84M | 11.30M | Gross Profit |
| 6.05M | ― | -34.46M | 72.40M | 5.34M | 4.01M | EBIT |
| -14.25M | -24.52M | 65.23M | 57.79M | 2.18M | ― | EBITDA |
| -23.74M | ― | -147.71M | 54.12M | 7.63M | 1.39M | Net Income Common Stockholders |
| -47.90M | -44.28M | -194.23M | 40.94M | 1.40M | ― |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 12.44M | 7.83M | 17.03M | 124.93M | 9.11M | 1.58M | Total Assets |
| 70.68M | 75.94M | 91.42M | 388.29M | 44.49M | 32.42M | Total Debt |
| 51.83M | 62.52M | 62.92M | 72.97M | 10.21M | 1.42M | Net Debt |
| 39.38M | 55.07M | 46.26M | 57.04M | 7.42M | 1.21M | Total Liabilities |
| 62.95M | 75.78M | 80.02M | 115.92M | 11.33M | 5.23M | Stockholders Equity |
| 7.74M | 156.66K | 11.40M | 272.37M | 33.15M | 27.19M |
| Cash Flow | Free Cash Flow | ||||
| 7.17M | 2.72M | -158.02M | ― | 755.16K | ― | Operating Cash Flow |
| 6.69M | 3.83M | -70.66M | ― | 3.22M | ― | Investing Cash Flow |
| 6.86M | -1.06M | 5.54M | ― | ― | ― | Financing Cash Flow |
| -20.00M | -15.78M | 68.06M | 236.37M | 793.01K | 1.42M |
Argo Blockchain Technical Analysis
Negative
0.39
Price Trends
0.51
Negative
0.77
Negative
1.02
Negative
Market Momentum
-0.04
Negative
45.49
Neutral
33.43
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For ARBK, the sentiment is Negative. The current price of 0.39 is below the 20-day moving average (MA) of 0.44, below the 50-day MA of 0.51, and below the 200-day MA of 1.02, indicating a bearish trend. The MACD of -0.04 indicates Negative momentum. The RSI at 45.49 is Neutral, neither overbought nor oversold. The STOCH value of 33.43 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for ARBK.
Argo Blockchain Risk Analysis
Argo Blockchain disclosed 93 risk factors in its most recent earnings report. Argo Blockchain reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Argo Blockchain Peers Comparison
Overall Rating
UnderperformOutperform
Sector (64)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
64 Neutral | $13.80B | 10.64 | 9.23% | 4.22% | 17.66% | -7.66% | |
63 Neutral | $2.65B | 21.95 | 4.35% | ― | 34.20% | ― | |
55 Neutral | $4.61B | 9.71 | 18.84% | ― | 69.38% | 30.30% | |
49 Neutral | C$1.72B | 3.54 | 2.56% | ― | 199.41% | ― | |
44 Neutral | $724.20M | ― | -31.62% | ― | 45.19% | -33.48% | |
39 Underperform | $399.98M | ― | -2.15% | ― | 27.99% | 90.99% | |
37 Underperform | $31.32M | ― | 242.25% | ― | ― | ― |
* Financial Sector Average
Performance Comparison
ARBK
Argo Blockchain
0.42
-1.37
-76.54%
RIOT
Riot Platforms
7.72
-3.90
-33.56%
MARA
Marathon Digital Holdings
13.32
-6.87
-34.03%
TSE:HIVE
HIVE Digital Technologies
2.53
-1.70
-40.19%
TSE:BITF
Bitfarms
1.62
-1.54
-48.73%
TSE:HUT
Hut 8
17.08
7.46
77.55%
Argo Blockchain Earnings Call Summary
Earnings Call Date: Nov 20, 2024 | % Change Since: -66.67% | Next Earnings Date: Apr 24, 2025
Earnings Call Sentiment Neutral
The earnings call presented a mixed outlook for Argo Blockchain. While the company made significant strides in reducing debt and exploring new revenue streams through high-performance computing, it faced notable challenges in its core Bitcoin mining business, including decreased revenues, negative profitability metrics, and operational uncertainties at Helios.Highlights
Debt Reduction Achievements
Argo reduced its debt by $12.4 million during the quarter, including full repayment of the Galaxy loan. This early repayment came four months ahead of schedule, improving cash flow and strengthening the balance sheet.
Exploration of High Performance Computing (HPC) Expansion
Argo entered into a non-binding letter of intent with the BE Group to explore an HPC expansion at Baie-Comeau. A feasibility study confirms potential for 23 megawatts of capacity, marking a strategic move to diversify revenue streams.
Dismissal of Class Action Lawsuit
The class action lawsuit, Murphy versus Argo Blockchain, was dismissed with prejudice and without leave to amend, removing a legal hurdle for the company.
Lowlights
Decrease in Mining Revenue and Margins
Q3 2024 revenue was $7.5 million, down from $12.4 million in Q2 2024. Mining margin dropped to 8% from 58% the previous year due to lower Bitcoin prices and higher energy costs.
Net Loss and Negative Adjusted EBITDA
Argo reported a net loss of $6.3 million for Q3 2024 and $39.2 million for the nine months ended September 30, 2024. Adjusted EBITDA was negative $2.1 million for the quarter.
Challenges in Bitcoin Mining Environment
Increased production costs due to rising mining difficulty and declining hash prices, with network profitability dropping to around 50% of pre-halving levels.
Uncertainty over Future of Helios Fleet
Galaxy announced it will not be renewing the hosting agreement at Helios beyond December 2024, affecting a fleet of 23,000 S19J Pro Miners.
Company Guidance
In the Q3 2024 earnings call, Argo Blockchain provided detailed guidance on its financial performance and strategic initiatives. The company reported mining 123 Bitcoin, generating $7.5 million in revenue for the quarter, and $36.7 million for the nine months ending September 30, 2024. The mining margin significantly decreased to 8% from 58% in the prior year due to lower Bitcoin prices and higher energy costs. Argo posted a net loss of $6.3 million for Q3 and $39.2 million for the first nine months of 2024, with adjusted EBITDA at negative $2.1 million for the quarter. The company successfully reduced its debt by $12.4 million, fully repaying the Galaxy loan. Looking ahead, Argo plans to diversify revenue streams by exploring a High Performance Computing (HPC) expansion at Baie-Comeau, which could add up to 23 megawatts of capacity. This strategic pivot aims to mitigate volatility in Bitcoin mining by tapping into growing markets like AI. Argo's capital allocation strategy will prioritize growth opportunities while maintaining financial discipline.Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.