Due to Bitcoin’s (BTC-USD) popularity and dominance, when people hear the word “blockchain,” they automatically think of Bitcoin. However, other cryptocurrencies are out there, even blockchain stocks, which have diverse applications beyond digital currencies.
Some rely on blockchain and cryptocurrencies, while some apply them in their business models. With tech stocks continuing to remain popular and blockchain technology being one of the core areas of innovation many investors are focusing on, combining the two as a powerful one-two punch for growth makes sense. With that in mind, here are three blockchain stocks to consider. These are companies that could certainly surge if a wave of interest permeates the blockchain space once again and crypto valuations trend higher over the long term.
Coinbase (COIN)
The cryptocurrency market is still risky, but Coinbase (NASDAQ:COIN) has continued to provide a more stable offering for traditional investors. Although market fluctuations are still rampant, Coinbase has seen strong financial results. The company’s earnings have become more stable, recently surpassing expectations. And while Coinbase’s valuation of 35 times earnings may appear hefty to many, it’s also true that any meaningful and sustained earnings growth could bring this stock into value territory in short order.
Wall Street analysts appear to agree. The company’s impressive Q2 earnings report came despite lower-than-expected trading volumes. J.P. Morgan kept a neutral rating on COIN stock, while Oppenheimer’s Owen Lau praised Coinbase’s profitability and leadership despite earnings volatility.
The San Francisco firm reported $1.45 billion in revenue, surpassing estimates. Transaction fee revenue dropped 27% due to reduced volume. Coinbase shares fell over 3% amid broader market declines. The company remains optimistic about other revenue streams, like derivatives and Coinbase Wallet, though Barclays maintains an underweight rating on the name.
Marathon Digital (MARA)
Marathon Digital’s (NASDAQ:MARA) Q2 2024 report was similarly strong, boosted by stronger average Bitcoin prices over the quarter. The company’s report highlighted a 78% boost in hash rate to 31.5 EH/s but a 30% drop in Bitcoin production to 2,058 BTC. Revenue surged 78% to $145.1 million, falling short of the $157.9 million forecast. The stock dropped following the report as investors continue to digest what the halving (and lower production) may mean for the stock moving forward, particularly if Bitcoin prices decline further from here.
Marathon Digital sold over half its mined BTC this past quarter to manage rising costs post-Bitcoin halving. Despite higher Bitcoin prices, daily BTC production fell by 9.3 BTC due to operational challenges.
Running for re-election, Donald Trump’s favorable view on Bitcoin and the Supreme Court’s ruling could boost Marathon Digital. With new SEC interpretations and Trump’s pro-Bitcoin stance, MARA might attract investor interest. Marathon’s Mara Pool mining pool also helps it capture a larger share of transaction fees, enhancing its competitive edge. Analysts see MARA as undervalued, given its lower price-earnings ratio than the estimated fair value.
MicroStrategy (MSTR)
Despite a tech stock selloff, MicroStrategy (NASDAQ:MSTR) saw a 17% rise in a month while the Nasdaq fell 4%. A 10-for-1 split boosted the company’s stock announced mid-July, climbing 266% over the past year, even as Bitcoin prices dipped. MicroStrategy remains the largest corporate Bitcoin holder, with shares set to trade adjusted from August 8.
On August 1, Michael Saylor revealed MicroStrategy bought 169 BTC in July, bringing its total to 226,500 BTC. Although the company has been facing some losses, it remains focused on expanding more of its BTC holdings. Revenues in Q2 reached $111.4 million, while gross profit saw $80.5 million.
Moreover, MicroStrategy’s BTC holdings will have a $5.68 billion value, down from their original cost of $8.33 billion. The average price per BTC was $36,798. CEO Phong Le noted that the holdings were valued 70% above the cost basis and focused on a new KPI, the “BTC Yield,” which would target 4-8% annually for the next three years. The 2024 BTC Yield is 12.2%, with goals set for 2025-2027.
On the date of publication, Chris MacDonald did not hold (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.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.
