Marathon Digital Holdings, Inc. (MARA) operates as a digital asset technology company that mines cryptocurrencies with a focus on the blockchain ecosystem and the generation of digital assets in the United States. As of June 30, 2022, the company had approximately 10,055 bitcoins.

On August 1, 2022, MARA expanded its credit facilities with Silvergate Bank, the leading provider of financial infrastructure solutions to the digital currency sector.

Hugh Gallagher, MARA’s CFO, said, “We are pleased to be closing on these debt facilities and believe that the combination of a term loan and revolver provides Marathon with exceptional flexibility as to our funding options.”

Over the past month, MARA has lost 35.3% to close the last trading session at $10.45. It has lost 66.8% year-to-date and 70% over the past year.

Here is what could shape MARA’s performance in the near term:

Weak Financials

For the second quarter ended June 30, 2022, MARA’s revenues came in at $24.92 million, down 15% year-over-year. Its operating loss came in at $178.21 million, up 61.6% year-over-year. Moreover, its net loss came in at $191.65 million, up 76% year-over-year.

Its negative adjusted EBITDA came in at $147.20 million compared to a negative $105.07 million in the year-ago period.

Stretched Valuations

In terms of its forward EV/S, MARA’s 11.19x is 331.9% higher than the industry average of 2.59x. Its forward EV/EBITDA of 34.60x is 185.1% higher than the industry average of 12.14x. Also, its forward P/S of 7.30x is 188.5% higher than the industry average of 2.53x.

Poor Profit Margins

MARA’s trailing-12-month negative gross profit margin of 17.40% is lower than the industry average of 50.35%. Its trailing-12-month EBITDA margin of negative 83.53% and trailing-12-month negative net income margin of 114.11% are lower than the industry averages of 12.98% and 4.25%.

Furthermore, MARA’s trailing-12-month ROCE, ROTC, and ROTA of negative 34.72%, 12.92%, and 14.26%, are lower than the industry averages of 7.11%, 3.96%, and 2.74%, respectively.

POWR Ratings Reflect Bleak Prospects

MARA has an overall rating of F, equating to Strong Sell in our proprietary POWR Ratings system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.

MARA has an F grade for Value and Quality, consistent with its higher-than-industry valuation multiples and lower-than-industry profit margins, respectively. In addition, it has an F grade for Stability, in sync with its beta of 5.33.

Click here for the additional POWR Ratings for MARA (Growth, Momentum, and Sentiment).

View all the top stocks in the Financial Services (Enterprise) industry here.

Bottom Line

MARA has demonstrated weak bottom-line performance. Moreover, analysts expect its EPS to decline 586.1% year-over-year to negative $2.47 in 2022. Also, it missed EPS estimates in all four trailing quarters. Given the stock’s bleak fundamentals, I think long-term investors should avoid MARA.

How Does Marathon Digital Holdings, Inc. (MARA) Stack Up Against its Peers?

While MARA has an overall POWR Rating of F, one might consider looking at its industry peers, Forrester Research, Inc. (FORR), which has an overall A (Strong Buy) rating, and Consumer Portfolio Services, Inc. (CPSS), WNS (Holdings) Limited (WNS), and Federal Agricultural Mortgage Corporation (AGM), which have an overall B (Buy) rating.

MARA shares were trading at $10.87 per share on Monday afternoon, down $0.05 (-0.46%). Year-to-date, MARA has declined -66.92%, versus a -17.60% rise in the benchmark S&P 500 index during the same period.

Riddhima is a financial journalist with a passion for analyzing financial instruments. With a master's degree in economics, she helps investors make informed investment decisions through her insightful commentaries.

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