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- 1 Marathon Digital Holding’s stock price has risen more than 126% since December.
- 2 A lot is going on in the company’s balance sheet, know more in the article below.
Marathon Digital (NASDAQ: MARA) has been rising since the mid of November. Investors are optimistic about the company because many fund houses have covered the stock and given buy ratings.
Moreover, the company has recently reported its press release 2 weeks ago. This article will go through the fundamental and financial aspects of the company.
About Marathon Digital Holdings
Marathon Digital Holdings, Inc. is a digital asset technology company, which engages in mining cryptocurrencies with a focus on the blockchain ecosystem and the generation of digital assets.
It is one of the largest Bitcoin miners in North America. With a market capitalization of over $6 Billion. It has emerged as a mid-cap stock.
The company set foot during the early 2010 days when only a handful of people knew cryptocurrencies. At present, this stock is being headed by the CEO, Frederik G. Thiel.
Why is the MARA Stock rising?
The MARA stock price has risen more than 126% since the start of December. Now, this surge is based on two major factors. The ETF speculation in the market has recent changes in the economic policies.
Investors on Wall Street are speculating on the stocks related to cryptocurrencies. The major reason is that Wall Street is expecting the Bitcoin ETF soon. Mining companies like Marathon Digital are likely to gain enhanced liquidity, increased demand more confidence in the investors.
The Street is bullish on Bitcoin after finance giants like Blackrock have given statements on the possibility of its ETF. Marathon derives its major revenue from the calculation of the proof of work transactions, which are being validated and added to the blockchain. Therefore, the investors are optimistic about the company and its stock price is rising.
There is another major reason why the Mara stock is skyrocketing, during November the Federal Reserve gave the decision about interest rates. The Fed didn’t raise the rates any further and that gave confidence to the capital markets.
The whole market went optimistic. By the end of December, the major indices showed the actual picture. Nasdaq Composite rose more than 15% whereas the S&P 500 rose as high as 13% rising to all-time high levels. It resulted in the rise of MARA stock along with the flow.
Moreover, in mid-December, the company released a press report in which it discussed a definitive agreement that it had entered. The company has entered into a purchase agreement to acquire two operational Bitcoin mining sites worth $179 million.
The company’s CEO gave his words upon the deal, “For the past year, Marathon has been vertically integrating as we transition into a more sophisticated and mature organization with a diversified portfolio of Bitcoin mining technologies and assets, and the acquisition of these sites is the next step in that evolution”
Financial Position of Marathon Digital Holdings
Long before the current surge, the company reported its quarter 3 financial reports. The total revenue of the firm grew by more than 7 times when compared to the same quarter of 2022. Concluding the depreciation into the picture, the gross profit becomes negative. However, the net profit was not negative due to the infusion of nonoperating income of $99.6 million.
Moreover, the Earnings before Interest Taxes and depreciation came up to $18 million for the company. In the last quarter, this value was just $6 million, which demonstrates that the revenue from the core operations has grown significantly.
Even though the revenue of the company has significantly grown over the last quarters, the balance sheet is showing declined growth. The balance sheet reflects the bigger picture of the company, which looks black and white for Marathon Digital.
The total assets of the company have declined from $1.48 billion in 3rd quarter of last year. It is a decline of 6.23%. Upon these assets, the major decline is seen in the long-term assets of the company.
Reduction of Debt
The company has brought some color to this picture after it reduced its long-term debt from $731 million to $325 million. That has also reduced the Debt-to-equity ratio to an optimum level of 0.32. This ratio suggests that the company has a debt of 32 units for every 100 units of retained earnings and share capital combined.
One of the key aspects is the net debt, which shows the company’s cash against its debt, in this case, a negative of $62 million. It indicates that the company has $62 million more cash than all of its total debt, a remarkable achievement for a midcap firm along with the growing revenue
The management’s plan to reduce the debt made almost no impact on the cash and equivalents as it has grown significantly since last year. The quick ratio shows the actual picture with a value of 11.33, which suggests that the company has 11 times the cash required by its short-term creditors.
In the cash flow statement, the operating cash flow is positive for the last two quarters. The free cash flow of the firm came positive as the last quarter shows.
The reason why the assets are decreasing can be seen in the cash flow statement. The company has been selling its fixed assets for the last two quarters.
Moreover, the asset turnover ratio is 0.18, which explains the current decisions of the management. This ratio shows the inefficiency of the company in utilizing its assets. Therefore, the decision to filter them could come in handy.
Conclusion
Marathon Digital Holdings, Inc. is a digital asset technology company involved in mining cryptocurrencies with a focus on the blockchain ecosystem. The company’s stock has shown a growth of more than 126% since the start of December. Marathon has shown a huge increase in revenue. However, the real picture is shown in its balance sheet.
Disclaimer
The views and opinions stated by the author, or any people named in this article, are for informational purposes only. They do not establish financial, investment, or other advice. Investing in or trading in stocks, cryptos or related indexes comes with a risk of financial loss.
Amanda Shinoy is one of the few women in the space invested knee-deep in crypto. An advocate for increasing the presence of women in crypto, she is known for her accurate technical analysis and price prediction of cryptocurrencies. Readers are often waiting for her opinion about the next rally. She is a finance expert with an MBA in finance. Quitting a corporate job at a leading financial institution, she now engages herself full-time into financial education for the general public.
