Should You Pick MARA Stock At $27?

MARA Holdings stock (NASDAQ: MARA), a Bitcoin mining company, was up nearly 40% in a month. The company is seeing an improvement in mining capacity and the rising Bitcoin price is bolstering its stock price growth. Furthermore, the company successfully placed $1 billion in convertible senior notes last month. Looking at a slightly longer period, MARA has seen its stock rise a whopping 700% from levels of $3 in early 2023 to $27 now. This can be attributed to:

1. a 266% rise in the company’s P/S ratio from 3.6x in 2022 to 13.3x now;
2. a 380% rise in revenues from $118 million in 2021 to $565 million now; partly offset by,
3. a 122% rise in total shares to 279 million, as the company issued more shares.

What’s Driving MARA’s Revenue Growth?

MARA Holdings’ Revenue growth over the recent years has been driven by an improvement in mining capacity. The company’s hash rate capacity (the number of cryptographic hashing algorithms solved per second) has surged from 7.0 exahashes per second to 25.2 in 2023, and further to 36.9 now. MARA now has 26,747 Bitcoins in its balance sheet.

2022 marked a bad year for cryptocurrencies, with Bitcoin falling to levels below $17,000 by the end of the year. However, it recovered sharply to over $42,000 by the end of 2023. Now, this year has been remarkable for cryptocurrencies, with BTC surging to levels of over $96,000 now. What has fueled this growth is the regulatory approval of the exchange-traded funds for Bitcoins earlier this year. But, more importantly, the recent investor optimism is fueled by the victory of Donald Trump in the U.S. Presidential elections. During his election campaign, Trump called for the U.S. to be the crypto capital of the world. It is expected that the new government will have fewer regulations for cryptocurrencies, which, in turn, will result in increased adoption.

Does MARA Stock Have Any Room For Growth?

Although MARA has outperformed the broader markets over the recent years, the increase has been far from consistent, with annual returns being far more volatile than the S&P 500. Returns for MARA stock were 215% in 2021, -90% in 2022, and 587% in 2023. In contrast, the Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, is considerably less volatile. And it has outperformed the S&P 500 each year over the same period. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride, as evident in HQ Portfolio performance metrics.

Given the current uncertain macroeconomic environment around rate cuts and multiple wars, could MARA face a similar situation as it did in 2022 and underperform the S&P over the next 12 months — or will it see a strong jump? We think that MARA stock has more room for growth from here, given the improvement in mining capacity and rising Bitcoin prices. Furthermore, MARA stock is trading at a lower valuation multiple of 8x trailing revenues, versus the stock’s average P/S ratio of 13x over the last three years. Our MARA Holdings Valuation Ratios dashboard has more details.

While MARA stock looks like it can see higher levels, it is helpful to see how MARA’s peers fare on metrics that matter. You will find other valuable comparisons for companies across industries at Peer Comparisons.

[1] Returns as of 12/2/2024
[2] Cumulative total returns since the end of 2016

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