Bitcoin and other cryptocurrencies received much investor attention last week due primarily to the stock market debut of Coinbase Global Inc. (COIN), a cryptocurrency trading platform. However, after hitting an all-time high of $64,800 on April 14, 2021, Bitcoin plunged to $52,148.98 on April 18. Other cryptocurrencies, such as Ether and Dogecoin also witnessed a pull back over the weekend. This is primarily owing to concerns--as yet unsubstantiated--that the U.S. Treasury Department may be looking to crack down on financial institutions that are money laundering using cryptocurrencies. A tweet claiming the potential action of the U.S. Treasury went viral on Saturday evening.
Cryptocurrencies witnessed a robust rally last year, with increased interest of institutional investors in these digital currencies as a hedge against continued increased money supply worldwide and acceptance of popular cryptocurrencies by big businesses. However, even before the recent sell-off, which was driven by a rumor, many analysts were concerned about cryptocurrencies entering an asset bubble.
Given this backdrop, we think it could be risky to bet even on stocks with exposure to crypto currencies. Shares of cryptocurrency-related companies Canaan Inc. (CAN), GreenBox POS (GBOX) and Marathon Patent Group, Inc. (MARA) plunged more than 20% last week. So, we think it could be safer to stay away from these stocks now.
Marathon Patent Group, Inc. (MARA)
Headquartered in Las Vegas, Nevada, MARA is a digital assets technology company focused on the blockchain ecosystem and the generation of digital assets. The company offers managed mining solutions on its robust proprietary infrastructure and smart mining software and operates one mining facility in Quebec.
For the fourth quarter, ended December 31, 2020, MARA’s operating loss was $4.96 million, compared to $1.71 million in the fourth quarter of 2019. The company’s net loss came in at $5.23 million compared to $1.51 million in the prior year period. Its loss per share was $0.10.
The Stock lost 21.6% last week and closed Friday’s trading session at $38.93.
MARA’s poor prospects are apparent in its POWR Ratings also. The stock has an overall F rating, which equates to Strong Sell in our proprietary rating system. It has an F grade for Stability and Quality, and a D grade for Value and Sentiment. Click here to see the additional POWR ratings for MARA (Momentum and Growth).
MARA is ranked #101 of 103 stocks in the D-rated Financial Services (Enterprise) industry.
Canaan Inc. (CAN)
Based in China, CAN researches, designs, and sells integrated circuit (IC) final system products by integrating IC products for Bitcoin mining and related components. The company provides a holistic AI (Artificial Intelligence) solution to customers including AI chips, algorithm development and optimization, hardware module, end-product and software services.
The company’s net revenues have declined 91.7% year-over-year to $5.86 million for the fourth quarter ended December 31, 2020. Its loss from operations was $10.88 million, while its net loss came in at $11.03 million. CAN’s net loss per ADS was $0.07 for the quarter.
Several law firms have filed a class action lawsuit against CAN on behalf of the investors who purchased or acquired its shares between February 10, 2021 and April 9, 2021. Among other allegations, the plaintiffs allege that the company failed to disclose that it had experienced significant ongoing supply chain disruptions during the fiscal 2020 fourth quarter. The legal action thus places a question mark on the company’s near-term outlook.
The stock lost 28% last week to close Friday’s trading session at $13.61.
CAN’s POWR Ratings are consistent with this bleak outlook. The stock has an overall D rating, which equates to Sell in our proprietary rating system. The stock has a F grade for Stability, and a D grade for Value, Quality, and Sentiment. Click here to see CAN’s ratings for Momentum and Growth also.
CAN is ranked #44 of 48-stocks in the Technology-Hardware industry.
GreenBox POS (GBOX)
Blockchain based solutions provider GBOX is focused on providing payment processing solutions. Its technologies provide cashless solutions that enable users to manage their businesses and purchases. Its products include QuickCard, GreenBox POS, and Loopz.
The company’s operating expense has increased 112% year-over-year to $5.30 million for the fourth quarter ended December 31, 2020. Its net loss came in at $4.50 million compared to $3.30 million in the fourth quarter of 2019. The company’s loss per share was $0.15.
The Stock has lost 46.9% over the past week and closed Friday’s trading session at $9.75.
GBOX has an overall D rating, which translates to Sell in our proprietary rating system. It has a D grade for Quality, Value, and Stability. Click here to see GBOX’s ratings for Growth, Momentum, and Sentiment.
GBOX is ranked #38 of 44 stocks in the Technology-Electronics industry.
The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
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MARA shares were trading at $34.07 per share on Monday afternoon, down $4.86 (-12.48%). Year-to-date, MARA has gained 226.34%, versus a 11.22% rise in the benchmark S&P 500 index during the same period.
About the Author: Ananyo Guha Niyogi
Ananyo’s ardent interest in capital markets, wealth management, and financial regulatory issues, led him to a career as an investment analyst. His goal is to educate individual investors by making complex financial issues easy to understand.
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