The stock market has witnessed significant volatility since the beginning of the year due to the challenging macroeconomic and geopolitical environment. The crypto market fared even worse, with Bitcoin and Ethereum declining more than 55% year-to-date.
Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, said, “Although at $21,800, Bitcoin is still some way off its June lows of under $19,000, volatility is once again wracking the market.”
The possibility of continued aggressive interest rate hikes to bring the elevated inflation down to the Fed’s target level could drive further volatility in the stock and crypto market.
Crypto stocks Coinbase Global, Inc. (COIN) and Marathon Digital Holdings, Inc. (MARA), which have declined more than 60% year-to-date, still look overvalued at their current price levels, considering their weak fundamentals. Therefore, these stocks are best avoided now.
Coinbase Global, Inc. (COIN)
COIN is a financial technology company that provides end-to-end economic infrastructure and technology. The company offers the primary financial account in the crypto economy for retailers, a marketplace with a pool of liquidity for transacting in crypto assets for institutions, and technology and services that enable ecosystem partners to build crypto-based applications and securely accept crypto-asset payments.
On July 21, 2022, the SEC announced insider trading charges against COIN’s former employee Ishan Wahi, accusing him of leaking information to his brother Nikhil Wahi and friend Sameer Ramani that COIN would list at least 25 crypto assets for trading on its platform.
COIN’s net revenue for the fiscal second quarter ended June 30, 2022, declined 63.7% year-over-year to $808.32 million. Its total operating expenses increased 36.9% year-over-year to $1.85 billion. The company’s net loss came in at $1.09 billion, compared to a net income of $1.61 billion in the year-ago period. Also, its loss per share came in at $4.98, compared to an EPS of $6.42 a year ago.
In terms of forward EV/S, COIN is currently trading at 4.13x, 41.4% higher than the industry average of 2.92x. Its forward P/S multiple of 4.74x is 61.4% higher than the industry average of 2.93x. In addition, the stock’s forward P/B ratio of 3.23x is 168.7% higher than the industry average of 1.20x.
Analysts expect COIN’s EPS to remain negative for fiscal 2022. Its revenue for the quarter ending September 30, 2022, is expected to decline 49.4% year-over-year to $663.73 million. The stock has lost 71.7% year-to-date to close the last trading session at $71.37.
COIN’s weak fundamentals are reflected in its POWR Ratings. It has an overall F rating, equating to a Strong Sell in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
It has an F grade for Growth, Value, Stability, and Sentiment. It is ranked #152 out of 153 stocks in the F-rated Software – Application industry. Click here to see the other ratings of COIN for Momentum and Quality.
Marathon Digital Holdings, Inc. (MARA)
MARA is a digital asset company that focuses on the blockchain ecosystem and the generation of digital assets. The company holds bitcoins in an investment fund.
On August 1, 2022, MARA expanded its credit facility by increasing its existing debt funding capacity by $100 million. This debt facility is expected to increase the company’s debt burden.
MARA’s revenues for the fiscal second quarter ended June 30, 2022, decreased 15% year-over-year to $24.92 million. Its operating loss widened 61.6% from the year-ago value to $178.21 million. The company’s net loss came in at $191.65 million, widening 76% from the year-ago period, while its adjusted EBITDA loss widened 40.1% year-over-year to $147.20 million. Also, its loss per share widened by 60.5% year-over-year to $1.75.
In terms of forward EV/S, MARA is currently trading at 12.17x, 314.5% higher than the industry average of 2.94x. Its forward EV/EBITDA multiple of 31.85x is 142.3% higher than the industry average of 13.14x.
Analysts expect MARA’s EPS to remain negative for fiscal 2022. Its revenue for the quarter ending September 30, 2022, is expected to decline 41.3% year-over-year to $30.35 million. It has failed to surpass the consensus EPS estimates in three of the trailing four quarters. The stock has lost 60.8% year-to-date to close the last trading session at $12.88.
MARA’s weak fundamentals are reflected in its POWR Ratings. It has an overall F rating, equating to a Strong Sell in our proprietary rating system.
It has an F grade for Growth, Value, Stability, Sentiment, and Quality. Click here to see the rating of MARA for Momentum.
COIN shares were trading at $66.58 per share on Friday morning, down $4.79 (-6.71%). Year-to-date, COIN has declined -73.62%, versus a -12.74% rise in the benchmark S&P 500 index during the same period.
About the Author: Shweta Kumari
Shweta’s profound interest in financial research and quantitative analysis led her to pursue a career as an investment analyst. She uses her knowledge to help retail investors make educated investment decisions. More…
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