The cryptocurrency market has always been a rollercoaster of highs and lows, and the stocks associated with it are no exception. This year, two notable crypto stocks, Marathon Digital and Riot Blockchain, have seen their shares tumble more than 15%. Despite the broader crypto market’s rally, these companies have not enjoyed the same upward trajectory. This article delves into the performance of these stocks and assesses whether they now present a bargain opportunity for investors.
Marathon Digital’s Decline
Marathon Digital, a leading Bitcoin miner, enjoyed a stellar performance last year, with its stock value soaring by 587%. The company’s success was closely tied to the rising valuation of Bitcoin, as it is one of the largest miners in North America. However, 2024 has painted a different picture; Marathon’s shares have dropped approximately 18% since January.
Despite this decline, Marathon Digital has been actively expanding its mining operations, which could potentially increase its revenue growth in the future. Last year, the company’s revenue jumped 229%, reaching $388 million, and net income hit an impressive $261.2 million. The downturn in stock price this year may be attributed to investors cashing out after the previous year’s significant gains.
Riot Blockchain’s Struggle
Riot Blockchain, another major player in the crypto mining industry, has also experienced a decrease in its stock value. The company’s revenue increased by 8% in 2023, reaching $280.7 million. Despite the positive performance, the stock has not been immune to the volatility that characterizes the crypto sector.
The company’s future earnings remain uncertain, and while the stock may not appear expensive, trading at 18 times its trailing earnings, the inherent volatility of the crypto mining operations makes it a high-risk investment.
Are They Bargain Buys?
The key question for investors is whether the current low prices of Marathon Digital and Riot Blockchain stocks represent a bargain buy or a value trap. The answer is not straightforward, as it depends on one’s risk tolerance and belief in the long-term potential of the cryptocurrency market.
Investors must weigh the potential for future earnings against the volatility and risks associated with the crypto industry. For those willing to take on the risk for exposure to Bitcoin, these stocks could offer growth opportunities, but caution and thorough research are advised.
