2 crypto stocks to avoid like the plague this September

After a solid bull run last year, the crypto market witnessed a massive sell-off this year amid concerns over macroeconomic and geopolitical headwinds. With many experts expecting the crypto market to experience further pressure, you may want to avoid fundamentally weak crypto stocks Marathon Digital (MARA) and Riot Blockchain (RIOT). Read on….

The stock market has faced relentless selling since the start of the year amid concerns over aggressive rate hikes by the Federal Reserve to curb rising inflation and the possibility of a recession. The crypto market has fared even worse, with the most popular cryptocurrencies, Bitcoin and Ethereum, down more than 55% so far this year.

Many experts believe that we are in the middle of a “crypto winter”, which means a prolonged bear market in the crypto space. DBX Digital Ecosystem CEO Igor Zakharov said: “The crypto market was already feeling the effects of world events, especially the Russia-Ukraine conflict that caused turmoil in global finance.”

“When TerraUSD and Luna collapsed and set off a domino effect in the crypto world, crypto winter had already begun,” he added. Investors’ bearish attitude towards crypto is evident from the ProShares Bitcoin Strategy ETFs (BITO) 56.8% decrease so far this year.

With the stock and crypto markets expected to remain under pressure due to the Fed’s aggressive rate hikes, we think it may be wise to avoid fundamentally weak crypto stocks Marathon Digital Holdings, Inc. (MARA) and Riot Blockchain, Inc. (RIOT).

Marathon Digital Holdings, Inc. (MARA)

MARA is a digital asset technology company primarily focused on cryptocurrency mining in the blockchain ecosystem and operates as a digital asset generator in the United States

MARA’s revenue fell 15% year over year to $24.92 million for the second quarter ended June 30, 2022. operating deficit increased 61.6% year-over-year to $178.21 million. The company’s net loss increased 76% year over year to $191.65 million. Its loss per share also increased 60.5% year over year to $1.75.

Analysts expect MARA’s loss per share for the current quarter to increase 81.8% year-over-year to $0.40. Revenue for the quarter ending September 30, 2022, is expected to fall 41.3% year-over-year to $30.34 million. It failed to beat consensus EPS estimates in each of the last four quarters. The stock has fallen 64% over the past year to finish last trading at $12.82.

MARA’s POWR Ratings reflects this bleak outlook. The share has an overall F rating, which corresponds to a strong sell in our proprietary rating system. The POWR ratings are calculated by considering 118 different factors, with each factor weighted optimally.

It has an F rating for growth, value, stability, sentiment and quality. To see the rating of MARA for Momentum, click here.

Riot Blockchain, Inc. (RIOT)

RIOT is involved in cryptocurrency mining and the overall blockchain system through various investments. The company has deployed approximately 8,000 application-specific integrated circuit miners at its cryptocurrency mining facility in Oklahoma. In addition, subsidiary Tess Inc. seeks to develop a blockchain-based escrow service for wholesale telecom operators.

For the second fiscal quarter ended June 30, 2022, RIOT’s net loss came in at $366.33 million, compared to net income of $19.33 million. Adjusted EBITDA loss came in at $65.17 million, compared to adjusted EBITDA of $2.38 million. The company’s adjusted loss per share came in at $0.50, compared to adjusted EPS of $0.03.

For the current quarter, RIOT’s EPS is expected to remain negative. It failed to beat Street EPS estimates in three of the trailing four quarters. Over the past year, the stock has lost 74% to close last trading at $7.63.

RIOT’s weak outlook is reflected in the POWR ratings. It has an overall F rating, which equates to strong sales in our proprietary rating system.

It has an F grade for stability, sentiment and quality and a D for value. It is ranked #80 of 81 stocks in the Technology – Services industry. click here to see the other reviews of RIOT for Growth and Momentum.

MARA stock was trading at $12.51 per share Wednesday morning, down $0.31 (-2.42%). So far this year, MARA has fallen -61.93%, against an increase of -16.59% in the benchmark S&P 500 over the same period.

About the Author: Dipanjan Banchur

Since he was in primary school, Dipanjan was interested in the stock market. This led to him taking 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 new trends in the financial markets.

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