Marathon Digital (NASDAQ:MARA) remains one of the top Bitcoin (BTC-USD) mining stocks investors continue to hone in on. And with Bitcoin making a recent move above $50,000 per token, that’s been great news for MARA stock holders, who have seen their investment surge appreciably of late. This is central to this MARA stock outlook.
That’s due to Marathon’s business model, which is highly correlated to Bitcoin prices. Given the company’s revenue comes in the form of newly-minted Bitcoin, a rising price of this top cryptocurrency directly hits the company’s top line. But with costs generally denominated in dollars, this widening exchange rate boost the company’s margins and profitability, key for its valuation.
So, the big question for many investors is whether this crypto rally can continue, and what Marathon Digital is doing to position itself for growth. Let’s dive into where this stock could be headed this year, as it approaches profitability.
Recent News with MARA stock
Marathon Digital, North America’s crypto-mining powerhouse, is setting its sights overseas, particularly in Africa for mining operations. VP Charlie Schumacher sees Africa as a perfect place for Bitcoin mining to be proven as a potential solution to the energy sector.
Ethiopia became a miner’s dream thanks to cheap energy and optimal weather. Chinese firms brushed aside by their motherland’s crypto crackdown in 2021 found refuge there. Schumacher stated that tying bitcoin miners to underutilized power sources in Africa would promote profitability and reliability. He added that it can encourage the creation of new power projects across the continent.
As Marathon zooms in on Africa, other peers have looked to add capacity in the U.S. market. It will certainly be intriguing to watch how the market share dynamics continue to shift over time, but Marathon’s global strategy is one I think investors will want to keep an eye on.
MARA is Breaking Even
A look into Marathon Digital Holding’s potential future financials is needed, to validate whether this stock can be worth investing in right now from a fundamental perspective. This $3.8 billion U.S.-based digital asset mining company, is nearing the profitability finish line. That’s important, as it’s something that has eluded this company in the past, and is something many value-conscious investors need to see before diving in. This is central to this MARA stock outlook.
Despite a $687 million loss in the full fiscal year, its trailing twelve-month loss has decreased to $349 million, breakeven close to touching. Investors are eager to know when Marathon Digital Holdings will step on the line of profitability. Of course, much of the positive outlook around this company stems from Bitcoin’s recent surge, which could take the company into profitability in the coming quarter. Ultimately, we’ll have to see where margins and profit numbers shake out. But there’s reason for optimism right now.
Three American Software analysts predict that Marathon Digital Holdings is nearing breakeven, with a projected final loss in 2023 and positive profits of $61 million in 2024. Additionally, Wall Street estimates an average annual growth rate of 119% to meet this target. However, profitability may lag, and these projections may turn out to be a bridge too far. As I said, we’ll simply have to see how the numbers come in over the coming quarters. But I do agree that there’s certainly room for optimism here.
The Bullish Stance
I think there’s certainly reason to be bullish around Marathon Digital at current levels. Analysts, including BTIG’s Gregory Lewis, have upgraded Marathon Digital to buy, citing rising profitability and margins due to Bitcoin price movements.
Indeed, that’s going to be the key factor investors will want to hone in on this year. I think MARA stock will likely continue to be among the most volatile in the market. However, I also think this stock’s risk/reward setup could be skewed to the upside, at least over the next year. This concludes my MARA stock outlook.
On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
