Sunday, February 25, 2024
Dividend Stocks

3 Reasons MARA Stock Is a Buy After the Dip

MARA’s shares have dipped, and now may be a buying opportunity.

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Marathon Digital Holdings (NASDAQ:MARA) stock represents a company that mines digital assets with a focus on the blockchain ecosystem and the generation of digital assets in United States.

The company’s focus on specifically mining Bitcoin (BTC-USD) has placed on the map of many crypto enthusiasts and investors. Shares have more than doubled over the past twelve months, and after a significant dip in share price, below are three reasons why investors should buy back into MARA stock .

A Closer Look at MARA Stock

In 2023, Bitcoin appreciated 164%, outperforming traditional assets, such as gold. One reason for this surge was crypto investors betting on SEC approval for Bitcoin spot ETFs. Recently, those investors got their wish.

In late November, the SEC handed down their decision to allow several spot bitcoin exchange-traded products.

This comes as a great news for both Bitcoin long-term holders and Marathon Digital. Bitcoin spot ETFs will ultimately help to further institutionalize the cryptocurrency, helping more normal investors allocate to it and potentially stabilizing the cryptocurrency in the long run as well.

Lower Interest Rate Tailwind

After U.S. inflation appeared stubborn in the first half of last year, the Consumer Price Index finally came down significantly by the fourth quarter. If interest rates were to remain elevated for an extended period, many investors would likely lose their risk appetite for assets like crypto, especially when safer treasury bonds are offering high yields.

However, with interest rate cuts slated for the second half of 2024, the risk appetite of investors and traders may come back and help sustain the rise in the bitcoin spot price. Marathon could greatly benefit here as a major minor of bitcoin. Both revenue and profits could climb substantially.

Valuation Isn’t Awful

Marathon Digital’s stock climbed more 587% in 2023 alone. However, since the start of 2024, the crypto miner’s shares have tumbled substantially.

In particular, shares have fallen over 29% since the start of the annual trading session in January. The substantial fall in share price could serve as a good entry point for investors wanting to allocate to a successful crypto miner.

Despite last year’s astronomic return, MARA share price is only trading at 24.4x forward EBITDA, which is not as high as one would have thought for a company operating in such a novel space.

On the date of publication, Tyrik Torres did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Tyrik Torres has been studying and participating in financial markets since he was in college, and he has particular passion for helping people understand complex systems. His areas of expertise are semiconductor and enterprise software equities. He has work experience in both investing (public and private markets) and investment banking.

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