Negative investor sentiment due to the multi-decade high inflation, Russia’s attack on Ukraine, soaring crude oil prices, and the possibility of aggressive interest rate hikes by the Federal Reserve dragged the market indexes down into correction territory earlier this year. Cryptocurrencies did not fare any better, witnessing wild price swings.
However, the markets have staged a recovery from their lows over the past few weeks after factoring in all the adverse developments that drove the volatility. And the recent signing of an executive order by President Biden to address the risks and harness the benefits of cryptocurrencies, on the back of their growing popularity and acceptability, bodes well for crypto-related stocks. According to a Research and Markets report, the global cryptocurrency market is expected to grow at a 58.4% CAGR, reaching $32.42 trillion by 2027.
Because the signing of the executive order and the strengthening of investor sentiment bode well for the crypto market, we think it could be worth adding crypto-related stocks Marathon Digital Holdings, Inc. (MARA), Riot Blockchain, Inc. (RIOT), and Hut 8 Mining Corp. (HUT) to one’s watchlist. Wall Street analysts expect these stocks to rally 100% - 140% in the near term.
Marathon Digital Holdings, Inc. (MARA)
Las Vegas-based MARA is a digital asset technology company that is focused primarily on mining cryptocurrencies in the blockchain ecosystem and operates as a digital asset generator in the U.S.
On April 5, 2022, MARA announced its intent to transition its bitcoin miners from its facility in Hardin, Mont., to new locations with more sustainable and non-carbon emitting sources of power, in line with its commitment to achieving 100% carbon neutrality by the end of 2022.
MARA’s total revenues have increased by 3,353% year-over-year to $150.46 million for its fiscal year ended Dec.31, 2021. The company’s income from operations came in at $118.72 million, compared to a $4.66 million loss from operations in the year-ago period. Also, its non-GAAP net income came in at $168.68 million, compared to a $4.96 million non-GAAP net loss in the year-ago period. In addition, its non-GAAP EPS came in at $1.70, compared to a $0.07 non-GAAP loss per share.
Analysts expect MARA’s EPS for its fiscal 2022 to increase 780.6% year-over-year to $2.45. Its revenue for the quarter ending March 31, 2022, is expected to increase 551.6% year-over-year to $59.64 million. Over the past year, the stock has declined 40.8% in price to close the last trading session at $26.26. However, Wall Street analysts expect the stock to hit $54.80 in the near term, indicating a potential 108.6% upside.
Riot Blockchain, Inc. (RIOT)
RIOT engages in cryptocurrency mining and the overall blockchain system through various investments. The Castle Rock, Colo., company has deployed approximately 8,000 application-specific integrated circuit miners at its cryptocurrency mining facility in Oklahoma. In addition, its subsidiary Tess Inc. seeks to develop a blockchain-based escrow service for wholesale telecom carriers.
On Dec. 1, 2021, RIOT announced that it had acquired Ferrie Franzmann Industries, LLC (ESS Metron) for roughly $50 million. ESS Metron designs and produces highly engineered electrical equipment solutions that are useful for deploying bitcoin mining operations at scale. This acquisition is vital for RIOT because it will likely complement its ongoing infrastructure expansion to 700 MW and significantly improve its internal engineering capabilities.
For its fiscal year ended Dec. 31, 2021, its total revenue increased 1,665% year-over-year to $213.24 million. The company’s adjusted EBITDA came in at $82.42, compared to a $6.32 million adjusted EBITDA loss in the year-ago period. Also, its net loss declined 37.4% year-over-year to $7.92 million.
For its fiscal 2022, RIOT’s EPS is expected to increase 1,075% year-over-year to $0.78. Its revenue for the quarter ending March 31, 2022, is expected to increase 292.3% year-over-year to $91 million. Over the past year, the stock has declined 60.2% in price to close the last trading session at $19.23. However, Wall Street analysts expect the stock to hit $44.14 in the near term, indicating a potential 129.5% upside.
Hut 8 Mining Corp. (HUT)
Headquartered in Toronto, Canada, HUT is a bitcoin mining company with industrial-scale operations. The company utilizes specialized equipment to solve computational problems to validate transactions on the bitcoin blockchain and provides hosting services to institutional clients.
On March 2, 2022, HUT announced that it had signed a multi-year partnership with Enthusiast Gaming Holdings Inc. HUT’s CEO Jaime Leverton said, “As a digital currency miner with data center infrastructure, we’re ideally positioned to join forces with one of North America’s largest and fastest-growing gaming entertainment companies and generate the unique benefits of this strategic partnership.”
HUT’s total revenues for its fiscal year ended Dec. 31, 2021, increased 326.8% year-over-year to CAD173.77 million ($139.36 million). The company’s mining profit increased 10,888.5% year-over-year to CAD108.12 million ($86.71 million). Also, its adjusted EBITDA came in at CAD96.59 million, compared to an adjusted EBITDA loss of CAD206,000 ($165,200).
Analysts expect HUT’s EPS for its fiscal year 2022 to increase 59.2% year-over-year to $219.28 million. Its revenue for the quarter ending June 30, 2022, is expected to increase 93.7% year-over-year to $51.94 million. Over the past six months, the stock has declined 42.2% in price to close the last trading session at $5.23. However, Wall Street analysts expect the stock to hit $12.32 in the near term, indicating a potential 135.6% upside.
MARA shares fell $1.26 (-4.80%) in premarket trading Wednesday. Year-to-date, MARA has declined -20.09%, versus a -4.74% rise in the benchmark S&P 500 index during the same period.
About the Author: Dipanjan Banchur
Since he was in grade school, Dipanjan was interested in the stock market. This led to him obtaining a master’s degree in Finance and Accounting. Currently, as an investment analyst and financial journalist, Dipanjan has a strong interest in reading and analyzing emerging trends in financial markets.
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